Infosys predicts revenue decline for coming year

Indian IT outsourcing provider Infosys has said that it expects its revenues to decline by between 3.1% and 6.7% in the coming financial year.

In an industry where revenue growth rates of 30% or above were the norm just 12 months ago, that prediction reveals quite how quickly its fortunes have taken a turn for the worse.

In 2009, the company achieved a relatively modest revenue growth of 11.7% to $4.6 billion. By the final quarter, though, the rot had begun to set it. Revenue for the fourth quarter, ending in March 2009, was down year-on-year by 1.8% to $1.1 billion.

Profitability is set to fall faster than revenue. Earnings per share are expected to dip by between 11% and 15% in the coming financial year.

The company also revealed that more people left its employment than were hired during the 2009 financial year. That deceleration of its once-ravenous recruitment activity will continue in the coming year.

On the surface, the offshore outsourcing industry is confident that cost-cutting pressure will drive corporate IT departments to extend their use of its services. However, economic uncertainty is preventing businesses from committing to the kind of long-term, large-scale outsourcing contracts by which they earn their crust.

Furthermore, just as organisations in continental Europe are warming to the idea of offshore outsourcing, the pendulum is starting to swing the other way in the US.

When accepting his nomination as presidential candidate by the Democrat party, now-president Barack Obama promised he would “stop giving tax breaks to companies that ship jobs overseas, and I will start giving them to companies that create good jobs right here in America."


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