Infosys Joins a Growing List of Companies Ditching Outlooks
(Bloomberg) -- Infosys Ltd. refrained from projecting full-year revenue for the first time in years, joining a growing list of businesses around the world struggling to assess the fallout of Covid-19.
The Indian company said it couldn’t offer a forecast until visibility into the pandemic improves, at a time the novel coronavirus is boosting demand for IT services but also disrupting the tech outsourcer’s ability to serve clients. Infosys reported a 6.1% rise in net income to 43.2 billion rupees ($564 million) for the March quarter. Sales rose 8% from a year ago to 232.7 billion rupees.
Covid-19 will negatively impact revenue by 5%-10%, said D.D. Mishra, senior director analyst at researcher Gartner Inc. “Infosys has exposure to both BFSI and manufacturing verticals, which generate more than 40% of revenues and global disruptions in both will impact its revenues in the coming quarters,” he said, referring to banking, financial services and insurance.
The pandemic presents a new challenge for Infosys and peers like Tata Consultancy Services Ltd. that were already operating in a difficult environment. They’re serving financial services giants and major global corporations through hundreds of thousands of workers logged in from their homes, after India ordered the world’s biggest lockdown to curtail the spread of Covid-19.
“93% of our workforce is currently working from home.” said Infosys’ Chief Operating Officer Pravin Rao. “We are in no hurry to get employees back to offices. Our first phase of returns, when it happens, will likely get 5% employees returning, and in the next phase will total about 15%.”
Last week, TCS reported a 1% slip in quarterly profit, while smaller rival Wipro Ltd. refrained from predicting its software-services revenue. India’s $181-billion IT services industry builds software and provides services to some of the world’s biggest banks and retailers. Before the pandemic, those companies had grappled with rapid technological changes that were hastening automation and bringing about shifts in their technology needs.
Infosys shares rose 3.9% to 653.30 rupees at the close in Mumbai before the earnings were announced. It’s American depository shares fell 2% to $8.4 at 10:39 a.m. in New York.
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