Is this a turnaround? Not really, says Infosys management

Infosys, the country’s second largest software exporter, is not yet ready to term October-December a turnaround quarter, as the management is just cautiously optimistic about the coming quarters.

In the CNBC-TV18 boardroom after the earnings, SD Shibulal said going forward the global economic situation remains challenging, with the key banking, financial services and insurance segment remaining week.

[caption id=“attachment_584519” align=“alignleft” width=“380”]  The company witnessed a 1.8 percent rise in pricing due to portfolio shift. AFP[/caption]

He said the better show in the quarter was a reflection of many things the company did earlier, including execution of strategy and mitigating the headwinds.

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He attributed the increase in the earnings in October-December to all around growth. Consulting and system integration business rose 51 percent in the third quarter.

The company witnessed a 1.8 percent rise in pricing due to portfolio shift.

CFO Rajiv Bansal denied that the company is making any sacrifice on pricing in order to increase the volumes.

“Pricing will remain stable in a narrow band going forward. It is related to portfolio mixing,” he said.

Shibulal said strong client relationships helped mitigate Q3 headwinds.

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The company expects the margins to remain stable. But it is planning to give a 2-3 percent increase in onsite wages. This is expected to impact the next quarter margins by 1 percent.

January-March is a a soft quarter for Lodestone, the Zurich-based company Infosys acquired in September 2012. A 1.3 percent drop in its margin in Q4 is expected.

Infosys expects clients’ IT budgets to be flat to marginally down and closures by February. The company is dependent on discretionary spends and clients’ confidence in taking decisions remains low.

According to CFO Bansal, pricing is a bigger challenge than staff utilisation. He, however, admitted that present staff utilisation of 70-71 percent “is not a very good thing”.