Infosys suspends FY revenue guidance, freezes hiring, hikes

Wipro Ltd had last week suspended its quarterly outlook, while others such as Cognizant withdrew their previous guidance due to market turbulence.

Infosys Ltd, India’s second-largest software exporter by revenue, on Monday refrained from offering a full-year revenue growth guidance, following the trend set by its peers amid the impact of covid-19.

Infosys’ management also said that it has suspended all hiring, promotions and salary increments this year as part of measures to control costs (REUTERS)

Wipro Ltd had last week suspended its quarterly outlook, while others such as Cognizant withdrew their previous guidance due to market turbulence.

“Considering the business uncertainty emanating from covid-19, the company is unable to provide guidance on revenues and margins for FY21 at this stage. The company will provide guidance after visibility improves,” Infosys said in a statement.

Infosys’ management also said that it has suspended all hiring, promotions and salary increments this year as part of measures to control costs. The company however said that it would honour all new job offers. UB Pravin Rao, chief operating officer said, in an earnings call, that Infosys has made around 35,000 job offers for FY21 which will be honoured.

Net profit at Infosys fell nearly 3% quarter-on-quarter (q-o-q) in the fiscal fourth quarter at Rs 4,335 crore. Profit however increased 6.3% on an annual basis aided by lower taxes and higher other income.

The Bengaluru-based IT firm’s revenue during the March quarter grew 0.8% sequentially and 8% year-on-year (YoY) to Rs 23,267 crore on the back of strong growth in digital revenues at $1.34 billion (41.9% of total revenue), with y-o-y growth of 31.7% in constant currency terms, although they are beginning to see “pressure in discretionary spending.”

The closely-watched dollar revenue declined 1.4% sequentially but grew 4.5% y-o-y to $3.19 billion in the March quarter on the back of large deals worth $1.65 billion.

Operating margins for the period stood at 21.1%, a marginal decline from 21.9% in the December quarter.

“While the immediate short-term will be challenging, looking ahead, we can see that there is a strong interest to consolidate with partners with high-quality and agile service delivery and strong financial resilience. I am confident we will emerge from this stronger,” said Salil Parekh, CEO and MD, Infosys.

The attrition rate in the fourth quarter stood at 20.7%, up from 19.6% in the December quarter, although the management indicated during the earnings call that most of them were “performance-based exits.”

Financial services and retail segments contributed close to half of the revenue for the fourth quarter. While revenue from financial services grew 5.7%, retail revenues grew 4.2% year-on-year in constant currency terms. The management however said that these verticals will be under pressure in the coming quarters due to the impact of covid-19.

Infosys has just emerged from an internal crisis after obtaining a clean chit from the US Securities & Exchange Commission (SEC) in the whistleblower case that accused the company’s top management of being involved in “unethical practices” to boost revenue and profit for many quarters. During the December quarter earnings, Infosys clarified that its audit committee found no evidence of financial impropriety or executive misconduct.

Ahead of the earnings, shares of Infosys closed 3.8% higher at Rs 652.90 on the BSE, outperforming a 0.19% rise in the benchmark Sensex.