Infosys Sees ‘Hit’ in 2012 as Clients Reduce Tech Spending
By Ketaki Gokhale - Nov 14, 2011
Infosys Ltd., India’s second-largest software exporter, said growth may slow next year because of a possible reduction in technology spending by clients.
Infosys is seeing “volatility” in customers’ decision-making, Co-Chairman S. Gopalakrishnan said in an interview in Mumbai yesterday. Sales growth at the Bangalore-based company fell in each of the past four quarters as a global economic slowdown prompted companies to reduce their outsourcing contracts.
“Probably there will be some budget cuts for next year,”said Gopalakrishnan, 56. “In the short term, you will take a hit. You can’t restructure your business, look at new areas fast enough to replace everything that is lost.”
The comments are the first the code writer made since it slashed the dollar-based sales forecast for the year ending in March last month while increasing the rupee estimates because of a weaker currency. Infosys, which has the biggest cash pile in India’s computer-services industry, aims to expand by spending $700 million on acquisitions in areas where the company has“very small” exposure, the former chief executive said.
“Budgets in Europe will come down quite substantially,”said Ankur Rudra, an analyst at Ambit Capital Pvt. in Mumbai, who has a “sell” rating for Infosys shares. Budget reductions in Europe will be bigger than among the U.S. companies, he said.
Infosys rose 1.2 percent to 2,808.80 rupees at close of trading in Mumbai. The shares have declined 18 percent this year, compared with a 3.2 percent drop for bigger rival Tata Consultancy Services Ltd. (TCS)
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