India's Infosys posts strong revenue, profit growth
Indian outsourcer Infosys reported revenue and profit growth in the first quarter, but is still troubled by strong staff attrition and key management changes.
Revenue in the quarter was US$2 billion, an increase of almost 8 percent over the same quarter last year, according to IFRS (International Financial Reporting Standards). Net profit grew by 9.7 percent to $487 million.
The company’s year-on-year revenue growth is far below that of the rest of the industry, said Sudin Apte, CEO and research director at analyst firm Offshore Insights. He pointed out that the company’s revenue had declined from the previous quarter.
Infosys’ CEO and managing director, S.D. Shibulal said in a webcast that the quarter had been disappointing. The company faced a slow-down in market segments such as retail, and even cancellations in some business segments.
For its fiscal year ending March 31, Infosys reported revenue of $8.2 billion, up 11.5 percent year on year, while net profit grew 1.5 percent to $1.7 billion. The company has forecast revenue growth of up to 9 percent for its current fiscal year.
Infosys brought back N.R. Narayana Murthy, its co-founder and first CEO, as executive chairman in June last year to turn around the company, which has been lagging behind most of its key competitors.
But the company also saw a number of key executives leave. “The frequent changes have generated uncertainty in the organization which is now affecting clients as well,” Apte said.
A high staff attrition rate of 18.7 percent is also worrying customers who won’t like to see one in five people working on their projects leave the company, he added.
The next challenge for the company is to find a successor to Shibulal who intends to leave before January next year.
Infosys added 50 clients during the quarter and 238 during the year. The company had 160,405 employees at the end of the quarter, after adding 2001 staff in the quarter.
North America is the largest market for Infosys, accounting for nearly 60 percent of revenue, followed by Europe with over 25 percent revenue share.