Infosys Increases Sales Forecast, Despite Downturn Fears

(Bloomberg) — Infosys Ltd. raised its annual sales forecast, remaining upbeat on large clients’ need to automate their systems and cut costs even as it warned of pockets of uncertainty because of a global economic downturn.

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Infosys announced Thursday that revenue will grow between 16%-16.5% in the 12 months to March. This compares to the 15%-16% growth it forecasted in October. Analysts expect an average of 21% growth. The upgrade was “driven by a growth of 17.8% in constant currency for the first nine months of FY23 and the strong large deal value for Q3” Chief Executive Officer Salil Parekh said at a news conference.

Sales at Infosys, India’s No. Information technology company Infosys and its larger rival Tata Consultancy Services Ltd. have seen their sales rise over the past two-years as global companies splurge on software services in order to meet growing demand during a pandemic-fueled boom.

That growth in India’s $227 billion outsourcing industry is now cooling as employees return to the office and global recession fears increase. Accenture Plc, an IT services company. Following disappointing bookings in the first quarter, Accenture Plc decided to keep its full year growth forecast unchanged.

Over the long term, analysts expect companies to continue to adopt more digital workflows to keep with technological shifts in cloud, big data, machine learning and artificial intelligence, bolstering the sales of Bengaluru-headquartered Infosys and its rivals.

Infosys reported a 13% increase of net income to 65.9 million rupees ($808 millions) between October-December. Analysts estimated an average profit of 64.65 million rupees. The sales reached 383.2 billion rupees.

“The signs around are showing a slowing global economy,” said CEO Parekh. “Some areas such as mortgages and investment banking in the financial services industry, telco, high-tech and retail are more impacted and that is leading to delays in decision making and uncertainty in spending in these areas.”

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Infosys could see fiscal 2023 sales growth of around the double digits in constant currencies, thanks to steady cloud demand. Though this figure is lower than 2022’s 19.7%, the slowdown isn’t due to competition but is a function of tougher comparisons and rising recession risk.

Anurag Rana, analyst

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Mumbai-headquartered TCS, Asia’s largest outsourcer, reported an 11% rise in quarterly income, but warned that client sentiment was cautious.

(Updates with comments by CEO in the second and seventh paragraphs.

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