Beating estimates, Infosys raises hopes

The software services exporter’s revision of its 2009-10 revenue forecast in dollar terms was due to cross-currency movements.

The country’s second largest software services firm, Infosys Technologies Ltd, beat profit estimates for the first quarter (Q1) as it cut jobs and costs. The company raised its full-year forecasts, and the stock markets responded favourably to its scrip as well as those of other large technology firms.

The exchange’s benchmark Sensex index declined 1.84% to 13,504.22 points.

However, Infosys, considered a standard bearer for India’s technology sector, expects contract prices to drop further by 5% during the fiscal year, due to pressure from clients and stronger competition from foreign rivals such as International Business Machines Corp. (IBM) and Accenture Ltd amid a global slowdown. But it also sees clients in the downturn-hit US moving more work offshore to low-cost locations such as India, though they may take a while to resume spending on technology.

“The consensus opinion is that recovery is expected by the middle of 2010,” chief executive officer and managing director S. Gopalakrishnan said after announcing the results on Friday. “This is still a growth industry; we have to prepare ourselves for that.” Infosys’ higher profit and raised forecast, and the talk of a potential recovery after months of gloom sent the company’s shares up 5% in intraday trading, before they ended the day 3% higher at Rs1,726.50 on the Bombay Stock Exchange. The exchange’s benchmark Sensex index declined 1.84% to 13,504.22 points.