Lower growth guidance overshadows Infosys Q2 show

India's second-biggest software exporter Infosys today reported better-than-expected results, posting a 9.8 per cent rise in September quarter consolidated net profit, but trimmed its sales growth forecast for the current fiscal on dollar woes.
The Bengaluru-headquartered IT bellwether also said its Chief Financial Officer Rajiv Bansal resigned and will be replaced by M D Ranganath.
Consolidated net profit in July-September rose to Rs 3,398 crore compared with Rs 3,096 crore in the year-ago period, Infosys CEO and MD Vishal Sikka told reporters at the Infosys campus on the city outskirts.
Revenue was up 17.2 per cent at Rs 15,635 crore in the second quarter ended September 30, from Rs 13,342 crore in the year-ago period, Sikka said.

"Though the company posted better-than-expected numbers, factors like lower revenue guidance in dollar terms, CFO resignation and dip in volume growth dented sentiment and triggered profit taking," said Jayant Manglik, President, Retail Distribution, Religare Securities.
For the full fiscal, Infosys said revenue in dollar terms is likely to grow 6.4-8.4 per cent, lower than the previous guidance of 7.2-9.2 per cent as broad weakness in IT spending and a stronger dollar are making clients wary.

While the company did not give reasons for the cut in growth forecast, the appreciation of the dollar against major currencies is said to be the main cause.

On a constant currency basis, guidance was unchanged, Sikka said. "I have now today repeated this 11 times and now for the 12th time, that there is no change or reduction to the guidance. There is no reduction in dollar terms," he added.
Sikka said revenue per employee will increase to USD 80,000 from USD 51,000 by 2020 and that could happen by amplifying people to software, bringing more innovation, integration of software and people creating value.
"From traditional services, there is ongoing pricing pressure that we need to deal with and the way we are dealing with is through automation. Of course, there are many other operational levers," he added.

"Bringing the power of automation into projects, we have taken significant steps towards this now. We have a few hundred projects where we consistently have demonstrated the augmentation of people with software, how that lowers the number of people per project, improves margins for us and increases attractiveness of clients," Sikka further said.
To a specific question, Sikka said the company is seeing the beginning of automation impact.