Infosys outlook signals recovery of IT sector

Infosys Technologies, India's number two outsourcer, raised its annual sales forecast as big financial services clients boost orders in an improving global economy, pointing to an industry recovery.

The company, a trendsetter for the $60 billion (Dh220.2bn) Indian outsourcing sector, expects spending on outsourcing to go up but said the appreciating rupee could hit profit margins in the short term.

"The numbers point out that the environment has eased quite a bit. Confidence in business momentum looks like coming back," said Tejas Doshi, an analyst at brokerage Sushil Finance.

Recent orders and stable prices have improved the outlook for Infosys and bigger rival Tata Consultancy Services after the world recession hit the sector last year. On Friday, TCS is expected to report quarterly profit rose 18.6 per cent on the year.

The country's showpiece outsourcing industry, which manages complex computer networks and maintains technology operations for global firms, has re-started hiring and is raising salaries.

"We are seeing the benefit of recovery and the worst seems to be behind us," Infosys CEO Kris Gopalakrishnan told reporters. "There is a concern, though it is becoming less and less, in terms of whether the recovery has really taken hold or not."

Quarterly profit at Infosys, which develops applications, designs supply chains and offers backoffice services, fell 3.6 per cent to Rs15.8bn (Dh1.28bn) under Indian accounting standards, from Rs16.41bn a year ago.

This was the first-ever year-on-year decline for Infosys. A Reuters poll had estimated a profit of Rs14.79 billion.

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