Date:31/01/12
India's information technology outsourcers have seen a slowdown in business because of the European debt crisis, but one of the largest, Infosys Ltd., is optimistic that revenue growth will accelerate again once the clouds of uncertainly are lifted.
"When we talk to our clients, we are definitely seeing a slowness in the velocity of business. That is due to the lack of confidence, the inability to take a clear direction, and that delays decision making," Infosys Chief Executive S.D. Shibulal told Dow Jones in an interview on the sidelines of the World Economic Forum.
"You know, the Greek debt crisis has been going on for years," C.P. Gurnani, chief executive of rival firm Satyam Computer Services Ltd., said in another interview at Davos. "It's like, today is this negotiation, tomorrow it's that negotiation, and nobody in business likes indecisiveness."
But the executives expect the disruption to be temporary.
"If I look at the past, whenever there is this kind of downturn or tightness, usually it takes around two quarters to even out," said Infosys' Shibulal, whose company is India's second-largest software exporter by revenue. That pattern was the case during cyclical downturns in 2003 and even 2008, he added.
"A new normal sets for the businesses and they get used to it. So then they will take their decisions," he said.
Infosys saw its net profit rise 33% from a year earlier in the three months to December, aided by a weakening Indian rupee that boosted results.
Revenue rose 31% to INR92.98 billion in the quarter, but in U.S. dollar terms, after exchange-rate effects are taken out, revenue rose 13.9% to $1.81 billion.
The company forecast that dollar revenue will be essentially flat in the quarter to March from the previous quarter, because of uncertainty in key western markets. Infosys derives around 95% of its revenue from abroad.
Satyam Computer Services, also known as Mahindra Satyam, saw a 10-fold jump in net profit in the July-September quarter, as the company recovers from a 2009 accounting scandal. Revenue rose 27% to INR15.78 billion.
Another Indian information technology firm, Tech Mahindra Ltd. took a 42.7% stake in Satyam Computer Services following the scandal and rebranded the company as Mahindra Satyam.
Despite the European sovereign debt crisis, Infosys is investing in the continent and sees room to increase its market share there.
The company currently derives around 65% of its revenue from the U.S. and around 23% from Europe. Shibulal said he hopes to increase the European proportion to 35% to 40% over the next five to seven years.
"Europe is still a large spender. They spend billions and billions of dollars in our space, and our market share is small. So we should be able to grow irrespective of some of the market conditions," he said.
How to deal with an extremely volatile rupee--the currency declined by around 15% against the U.S. dollar in 2011, but so far this year is up around 7%--is a key issue for the entire Indian IT sector.
The companies employ varied strategies to hedge their foreign-exchange risk through instruments such as forward contracts and options.
Infosys has traditionally adopted a lighter hedging stance than some rivals, which means it benefits disproportionately when the rupee falls but is hurt more when it rises.
Earlier this month, Infosys Chief Financial Officer V. Balakrishnan told Dow Jones that the company expects the rupee to resume falling, weighed down by India's trade deficit.
Shibulal said in Davos that Infosys has always stuck to a consistent strategy of hedging around two months' worth of expenses, and this hasn't changed. He declined to say where he thinks the rupee is headed, other than that it will continue to be volatile.
Satyam's Gurnani also declined to make a forecast on the currency. Satyam is currently hedging around 25% to 30% of revenue, he said.
Source: Total Telecom
Indian IT outsourcers see temporary uncertainty over Europe
India's information technology outsourcers have seen a slowdown in business because of the European debt crisis, but one of the largest, Infosys Ltd., is optimistic that revenue growth will accelerate again once the clouds of uncertainly are lifted."When we talk to our clients, we are definitely seeing a slowness in the velocity of business. That is due to the lack of confidence, the inability to take a clear direction, and that delays decision making," Infosys Chief Executive S.D. Shibulal told Dow Jones in an interview on the sidelines of the World Economic Forum.
"You know, the Greek debt crisis has been going on for years," C.P. Gurnani, chief executive of rival firm Satyam Computer Services Ltd., said in another interview at Davos. "It's like, today is this negotiation, tomorrow it's that negotiation, and nobody in business likes indecisiveness."
But the executives expect the disruption to be temporary.
"If I look at the past, whenever there is this kind of downturn or tightness, usually it takes around two quarters to even out," said Infosys' Shibulal, whose company is India's second-largest software exporter by revenue. That pattern was the case during cyclical downturns in 2003 and even 2008, he added.
"A new normal sets for the businesses and they get used to it. So then they will take their decisions," he said.
Infosys saw its net profit rise 33% from a year earlier in the three months to December, aided by a weakening Indian rupee that boosted results.
Revenue rose 31% to INR92.98 billion in the quarter, but in U.S. dollar terms, after exchange-rate effects are taken out, revenue rose 13.9% to $1.81 billion.
The company forecast that dollar revenue will be essentially flat in the quarter to March from the previous quarter, because of uncertainty in key western markets. Infosys derives around 95% of its revenue from abroad.
Satyam Computer Services, also known as Mahindra Satyam, saw a 10-fold jump in net profit in the July-September quarter, as the company recovers from a 2009 accounting scandal. Revenue rose 27% to INR15.78 billion.
Another Indian information technology firm, Tech Mahindra Ltd. took a 42.7% stake in Satyam Computer Services following the scandal and rebranded the company as Mahindra Satyam.
Despite the European sovereign debt crisis, Infosys is investing in the continent and sees room to increase its market share there.
The company currently derives around 65% of its revenue from the U.S. and around 23% from Europe. Shibulal said he hopes to increase the European proportion to 35% to 40% over the next five to seven years.
"Europe is still a large spender. They spend billions and billions of dollars in our space, and our market share is small. So we should be able to grow irrespective of some of the market conditions," he said.
How to deal with an extremely volatile rupee--the currency declined by around 15% against the U.S. dollar in 2011, but so far this year is up around 7%--is a key issue for the entire Indian IT sector.
The companies employ varied strategies to hedge their foreign-exchange risk through instruments such as forward contracts and options.
Infosys has traditionally adopted a lighter hedging stance than some rivals, which means it benefits disproportionately when the rupee falls but is hurt more when it rises.
Earlier this month, Infosys Chief Financial Officer V. Balakrishnan told Dow Jones that the company expects the rupee to resume falling, weighed down by India's trade deficit.
Shibulal said in Davos that Infosys has always stuck to a consistent strategy of hedging around two months' worth of expenses, and this hasn't changed. He declined to say where he thinks the rupee is headed, other than that it will continue to be volatile.
Satyam's Gurnani also declined to make a forecast on the currency. Satyam is currently hedging around 25% to 30% of revenue, he said.
Source: Total Telecom
Views: 1111
©ictnews.az. All rights reserved.
Similar news
- Mobile operators of national market to reduce roaming tariffs
- Iran vows to unplug Internet
- China Targeting Telecoms in Corruption Probe
- Bangladesh to use electronic voting system for next elections
- Philippine IT sector to launch five-year digital strategy plan
- Russian Premier Vladimir Putin meets ITU Secretary-General Hamadoun Touré
- US lawmakers propose to regulate use of geolocation data
- Unlimited mobile data plans dying as telcos gear up for cloud future
- Europe at risk of falling behind US and Asia on 4G use
- Netherlands first to regulate on net neutrality
- Korean Co Takes Aim At Display Patents
- Regulators, Banks Look for IT Hires After Breakdowns
- Electron transactions spreading
- Schools in remote rural areas will connect to the single database via network without SIM
- Obama to Personally Tweet From Twitter Account
