Infosys Ltd, the country’s second largest software exporter, has said it is on track to meet its growth estimate of 7-9 per cent this fiscal despite macroeconomic volatility and lower demand from top clients, but added that it will take a while for the company to report higher growth.
Infosys’ growth estimate is much lower than the industry guidance, which, according to Nasscom, is in the range of 13-15 per cent for FY-2015.
Addressing Motilal Oswal analysts in Mumbai, UB Pravin Rao, chief operating officer, said: “We have definitely underperformed over the last few years and it will take a while for us to get growth back.”
The company’s margins are expected to be in the range of 24-25 per cent, lower than market leader Tata Consultancy Services’ 28.8 per cent. “Our focus is on growth and the company cannot sustain margins without growth,” Rao said.
Signalling the company’s intent to grow business through acquisitions, he added Infosys will look at buying firms in the life sciences and IT infrastructure management segments in markets such as Latin America and Japan.
On Tuesday, the company’s scrip closed marginally down at ₹3,620.60 on BSE.
‘Market is stable’
Infosys, along with other IT companies, believes demand for outsourcing continues to be strong and the situation looks better at this point compared to the year-ago period. “Our pipeline is good and the market is stable,” said Rao. Also, the company is seeing traction in financial services, communications and energy sectors.
Rao added that high attrition is an area of concern and it will take several quarters to bring it down to 14 per cent, from 20 per cent now. Rao attributed this to the distraction around CEO succession, coupled with a spate of top management exits. “With the new leadership in place, that distraction will go away.” Infosys, in June, appointed Vishal Sikka as the first non-founding CEO of the company.
Rao also maintained that the company would use its $100-million venture fund to invest in start-ups, something that Sikka has outlined as a part of his strategy since taking over the company.