Infosys has done it again and it feels like a deja’ vous episode of 2004 with the outsourcing giant reeling in profits that were not possible until recently.
More than that, the results imply a significant upcycle of outsourcing in the near future, reports dnaindia.com. According to analysts at CLSA Asia Pacific Markets, the results declared by India’s no. 2 outsourcer are better than expected, particularly in the wake of a recession.
Results for the December quarter indicate that net profits are up 2.7 percent in comparison to the July - September quarter.
Moreover, Infosys has said it is hiking its sales guidance by 2 percent for the fiscal year ending March 31. That figure caps at $4.76 billion. This comes after analysts had predicted a 1.3 percent decline in sales. It is now believed that the recovery, which is expected to take shape unevenly around the world, will produce a higher volume of outsourcing orders for IT software and services.
Infosys shares were up after the company released its results Monday. However, the company said that a spike in the rupee could offset profits since it will accumulate less in exchange for the dollar earned in the U.S.
Bhavtosh Vajpayee and Nimish Joshi, CLSA analysts said in a statement, “… we have seen a December quarter this strong [after six years]. With a lot of
business billed hourly/daily and more holidays, the December quarter (usually)
mean a weak seasonal pattern. Not so this time.”
Most analysts see the trend in outsourcing as being binary, indicating extreme fluctuations into highs and lows. When clients halt making decisions, outsourcing comes to a halt. Moreover, the cost saving advantage put forward by Indian outsourcing firms loses significance while bankruptcies, mergers, restructurings and changes in management are ongoing.
“When outsourcing rains, it pours,” said Joshi and Vajpayee.
