Posts Tagged ‘Infosys’

Infosys Europe revenue cross $2 billion for first time

April 21st, 2014

Country’s second largest IT firm InfosysBSE 0.29 % has crossed the $ two billion revenue mark in Europe for the first time, driven by strong demand for consulting and system integration (CSI) services.outsourcing55

The Bangalore-based firm, which reported revenues of $ 8.24 billion for the year ended March 31, 2014, saw the European region accounting for 24.4 per cent of the topline.

“If you look at the last year, we have had a good growth in Europe of over 17 per cent. And for the first time, we have crossed the $ 2 billion revenue mark in Europe, which is a significant milestone,” Infosys President and Member of Board BG Srinivas told investors on a conference call.

Last quarter, the revenue percentage from Europe was 25 per cent and Infosys added 17 new clients in the region, he added.

“Overall, CSI revenues from Europe is significantly higher as compared to rest of Infosys; it is closer to 42 per cent, primarily led with SAP which again has a dominant presence in the Continent Europe,” Srinivas said.

For the quarter ended March 31, 2014, North America accounted for 59.8 per cent of Infosys’ revenues (from 60.2 per cent in the year-ago period), while Europe contributed 25.2 per cent (from 25 per cent).

The decline in share of sales from North America comes at a time when industry analysts are betting on improving macro- economic sentiments in the region.

Large outsourcing deals in the US are expected to be in the offing as clients spend more on IT and outsourcing compared to the last few years.

This also signals that Indian IT players are making headway in the region, especially Continental Europe, which was dominated by local players.

Although Europe ranked second in terms of revenue contribution to the export revenues of the over $ 118 billion Indian IT-BPO market, the success seems to have been limited to the UK and Nordic countries and Continental Europe largely remains untapped.

During the fourth quarter, Infosys signed four large deals with total contract value of $ 700 million with two deals each in the Americas and Europe regions.

Talking about the countries in the region, he said France continues to be “slow” even as it is sees some “early signs of deal activity picking up”.

“In the UK, we see activities in financial services, telecom, energy and utilities, and retail. In the Continent, in Germany and Switzerland, there is significant activity in the manufacturing sector and life sciences,” Srinivas added.

He said Infosys was expanding presence in other markets like Nordics (Denmark, Finland, Iceland, Norway and Sweden) and Benelux (Belgium, the Netherlands and Luxembourg) as well.


IT bigwigs TCS, Infosys, HCL, Wipro turn the corner on discretionary deals

April 21st, 2014

There is a common theme underpinning the latest quarterly numbers of the top four information technology companies – TCS, Infosys, WiproBSE -4.81 % and HCL TechnologiesBSE 0.64 %. The demand scenario for the Indian IT outsourcing industry is firm on account of rising expenditure on large, long-term contracts that are known as discretionary deals on account of their ability to improve the business process efficiency of the client.outsourcing54

Alook at the trailing 12-month data for these companies shows that after a depressed trend in FY13, the dollar-denominated topline growth resumed in FY14. For the sample of the top four IT players, aggregate dollar-denominated revenue growth decelerated to 9.6 per cent in FY13 due to a prolonged slowdown in Western economies, which forced clients to postpone projects. Growth sped up in FY14 as client budgets once again expanded. Revenue grew 12.7 per cent for the sample during the year. Though this is far below the peak growth of 25.7 per cent recorded in FY11, it seems to indicate that demand is finally picking up.

TCSBSE 0.75 % and HCL Tech retained the lead in terms of revenue growth for the fifth consecutive fiscal. It needs to be noted that HCL Tech’s fiscal ends in June. Revenue at TCS and HCL Tech grew 16.2 per cent and 14.1 per cent, respectively. Infosys, though lagging them, was able to jump back to double-digit growth of 11.5 per cent from 5.8 per cent in FY13. Wipro, on the other hand, reported a modest improvement in revenue growth at 6.6 per cent from 5 per cent a year ago.

The analysis of net profit growth shows that barring Infosys, other players were able to improve the net margin in FY14 from a year ago. For Infosys, it was a tough year with erosion in profitability, raising questions over its ability to manage growth without sacrificing quality. Its net margin narrowed to 21.2 per cent from 23.3 per cent in the previous fiscal. TCS improved its net margin by 130 basis points to 23.4 per cent whereas Wipro’s margin expanded 90 basis points to 18 per cent. A basis point is 0.01 percentage point.

The growth trend will continue to be non-secular among these players in the sense that TCS and HCL Tech have retained their lead in winning new deals and showing signs of robust growth ahead. In comparison, InfosysBSE 0.38 % and Wipro appear to be lagging. The counters of these companies may witness some selling in the near term considering the sharp increase in valuations over the past year. For instance, the trailing price-earnings ratio (P/ E) of Infosys shot up from around 14 to over 17 in the period. The P/Es of TCS, Wipro, and HCL Tech are 22.7, 18.4 and 17.3 in that order.


Mixed bag seen for IT services firms

April 2nd, 2014

The performance of the Indian information technology (IT) services sector during January-March 2014, the financial year’s fourth quarter (Q4), is likely to be a mixed bag.Outsourcing34

Most large companies are expected to show a 2-3.5 per cent quarter-on-quarter (QoQ) growth in revenue, amid appreciation of the rupee, seasonal weakness and company-specific issues.

Tata Consultancy Services (TCS) is likely to continue being the top performer. Infosys, the second largest, is likely to show a marginal decline or tepid growth. Wipro’s performance is expected to converge with those of peers.

“The results are likely to be mixed, with seasonal softness (slower decision making on ramp-up of new projects at the start of a new year),” brokerage firm IDFC Institutional Securities said in a note. “We expect the commentary to be positive, on the back of a healthier demand environment for IT outsourcing.”

The brokerage company estimates sequential revenue growth of the top five IT firms to be in 2.5-3.5 per cent, barring Infosys, which it sees posting a tepid 0.3 per cent rise.

On similar lines, Religare Institutional Research expects most IT companies to have revenue growth of two to three per cent, with Infosys posting a 0.3 per cent sequential decline.

The expectations from Infosys have dipped after the company’s management said last month that weakness in client spending continued through the quarter. It also said it saw “unanticipated project ramp-downs and cancellations” in Q4, and faced “challenges in skill mismatches”, which might lead to meeting only the lower end of its annual revenue growth forecast. For FY14, the Bangalore-based company had given an expectation of 11.5-12 per cent growth here.

Additionally, Infosys has seen a slew of senior-level exits over the past six months, which some analysts believe is harming the relationships with clients.

On margins, analysts do not expect much sequential movement for most IT services companies, due to limited currency movement. However, some companies could take a hit due to salary increments. Analysts estimate Infosys would forecast a seven to nine per cent revenue growth for FY15.

“Ebit (earnings before interest and tax) margins are likely to remain stable,” Anand Rathi Shares and Stock Brokers said in a pre-earnings note. “The average currency realised rate for Q4 is going to be very similar to that of Q3, giving room for companies to maintain their margins at the same levels as last quarter. Also, in the absence of other headwinds during the quarter, barring Tech Mahindra (which will book wage rises during the quarter), we expect companies to maintain their margins at Q3 levels.”

Investors will remain watchful of companies’ outlook for FY15, as there was mixed commentary over recent months. While some of the large entities had a bullish demand environment, many others have said decision making by clients was still slow. Additionally, comments about currency management will be key, after the rupee recently reversed direction.

“We expect management commentaries to reflect cautious optimism on the return of IT spend in the US, increasing adoption of outsourcing in Europe and overall pick-up in the large deal pipeline,” said IDFC Institutional Securities.


Infosys wins outsourcing contract from Volvo

March 18th, 2014

India’s second largest software services exporter Infosys Ltd has won a new outsourcing contract from automaker Volvo Car Corp. to provide application development services for its global operations.Outsourcing1

No financial details of the transaction were disclosed.

As part of the deal, Infosys will develop applications to support functions such as sales and marketing, customer service, manufacturing and product development for Volvo.

“We will be a strategic supplier for Volvo Cars to deliver excellence and innovation to transform their IT landscape to a modern architecture,” Nitesh Bansal, vice-president of manufacturing at Infosys, said in a statement. “This agreement also reflects our strategic focus on the Nordic market and strengthens our presence in Sweden.”

Infosys has an existing deal with Volvo that was first signed in 2010. The Bangalore-based firm also has outsourcing agreements with other automotive firms such as BMW AG, Daimler and Toyota.


Infosys BPO collaborates with Costa Rica to train students

January 30th, 2014

Infosys BPO, the business process outsourcing subsidiary of IT major Infosys, on Wednesday announced that it was collaborating with the Government of Costa Rica and the Costa Rican Investment Promotion Agency (CINDE) to train students on technical and business process skills.

The programme will play an important role in strengthening the existing talent pool in the country and provide an enriching international exposure to the selected students, the company in a release said.

The agreement was signed in the presence of Vice President of Costa Rica Luis Lieberman, it added.

Infosys said, “The 10-week intensive training programme will see 64 students acquire skills on SAP and Cloud technologies based on Microsoft and JAVA platforms at the Infosys campus in Mysore, India.” The first programme is slated to complete by March 2014.


Infosys reportedly wins a $98 million contract with TNT

January 30th, 2014

Infosys, India’s second largest outsourcing supplier has reportedly been awarded a $98.71 million contract with TNT Express, according a Times of India report.

TNT is believed to have contracted the IT outsourcer as part of the couriers aim to create savings of $220 million by 2015. The IT contract is designed to help the company achieve savings targets through a combination of consolidating and optimising services.

As part of its infrastructure development plans, Infosys will deploy new online booking and payment platforms.

Infosys will also support TNT’s move to increase its focus on lucrative international markets.


Infosys lifts revenue growth outlook on improving outsourcing demand

January 13th, 2014

Infosys  is chasing more big-ticket contracts from Europe and the United States this year and keeping a lid on costs as the outsourcing services giant powers ahead with a turnaround to regain market share.

India’s second largest software services exporter raised on Friday its revenue growth outlook for the 2013/14 financial year to between 11.5 and 12 percent from a previously forecast 9-10 percent, citing higher demand for its services.

It reported its first decrease in its workforce in nearly five years, with overall attrition rates in the December quarter rising to 18.1 percent from 15.1 percent a year ago.

“While the organisation is going through transformation, there may be some minor disruptions,” Chief Executive SD Shibulal told an analysts’ briefing after announcing the company’s earnings.

“But as you can see over the last two or three quarters as the transformation has happened we have continued to focus on our clients, we have continued to focus on growth, and continued to focus on margins improvement.”

The departure of 1,823 staff in the December quarter, and several senior executives over the last six months, comes amid a strategic shift led by founder N.R. Narayana Murthy, who was brought back last year after a string of disappointing results.

Infosys did not say whether the employees had been laid off or had left voluntarily.

“I am not too worried about it. With every restructuring there are some people who have to go,” said Juergen Maiar, a Vienna-based fund manager with Raiffeisen Euroasien Aktien, which owns Infosys shares.

“We are looking at improvement in utilisation with the reduction in staff numbers, which is good for investors.”

Infosys shares rose as much as 3.6 percent after the company announced its quarterly earnings. The Mumbai stock market was trading 0.7 percent higher.

Infosys was once considered a bellwether of India’s export-driven $108 billion IT outsourcing industry, but an inflexibility on prices, among other factors, resulted in it losing market share to rivals like Tata Consultancy Services,   Wipro  and Cognizant Technology.

Infosys, which has been struggling to boost revenue from its own software platforms and high-margin consulting business, appeared to have some success in winning over large deals as the turnaround took hold. It said the number of $100 million-plus revenue clients rose to 15 in the quarter up from 12 a year earlier.

Worldwide IT spending growth is expected to accelerate to more than 5 percent in 2014 after growing last year at its slowest pace since the financial crisis, according to the International Data Corporation. Infosys, whose customers include Bank of America Corp and BT Group, said net profit for the three months ended December 31 was Rs 2875 crore, compared with Rs 2369 crore a year earlier.

That compares with the average estimate of Rs 2715  crore.

Revenue rose 25 percent to Rs 13030 crore  in the quarter. The company added 54 new clients during the quarter, taking the tally to 888.


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