Infosys raises sales forecast on resilient IT demand

Infosys Ltd raised its annual sales forecast on upbeat demand for its digital services, alleviating concerns that a slowing global economy will stifle technology spending.Revenue will grow 14% to 16% in the fiscal year through March 2023, India’s No 2 software services exporter said in a statement yesterday. That compares with 13% to 15% it projected in April. Analysts predict growth of 17%, the average of estimates compiled by Bloomberg.For the April to June quarter, Infosys said revenue rose 24% from a year ago to Rs344.7bn ($4.3bn), beating estimates of Rs340.09bn. Revenue from the financial services segment rose 15% from a year earlier to Rs105.6bn, although it trailed estimates of Rs106.87bn.The company’s net profit rose 3.1% to Rs53.6bn ($671mn) for the first quarter to June, despite expenses such as wage costs. Analysts estimated Rs56.7bn.India’s showpiece $227bn IT industry, led by Tata Consultancy Services Ltd (TCS) and Infosys, is bracing for an economic slowdown with some economists predicting a global recession. Bigger rival TCS earlier this month reported net income of Rs94.8bn, missing analysts’ projections.Technology spending may also be hurt by customers bringing employees back to workplaces, dampening the demand for remote services that surged during the early part of the Covid-19 pandemic. Russia’s attack on Ukraine is set to slow new orders especially from Europe, which accounts for a quarter of Infosys’s revenue.“We continue to gain market share and see a significant pipeline,” chief executive officer Salil Parekh said in the statement. Parekh later told a news conference that the company’s pipeline of larger deals is now higher than what it saw in the past three to six months.Finance Chief Nilanjan Roy, however, warned that the company making “competitive compensation revisions” to reduce attrition levels will impact margins in the immediate term.Rising competition from global IT giants such as Accenture Plc and International Business Machines Corp, and an acute tech talent crunch have also pressured margins of India’s software services companies.Still, global enterprises are investing in cloud services, data and analytics as they compete with more nimble startups, keeping most of India’s big IT firms positive about long-term growth prospects.