Infosys expects this year to be normal for IT industry

IT bellwether Infosys today said it expected this year to be a normal year for the IT industry but was concerned about when the IT budgets would be spent.

On the macro environment, Infosys CEO and Managing Director S Gopalakrishnan said, "we have given our guidance 18-20% for the full year which we have not revised. From a calibration perpsective, the budget are same, no reduction in budgets."

From a spending perspective, there may be some volatility or delays based on the environment which means they needed to be cautious. But they are making the necessary investments to grow faster in the future.

"If you look at this quarter 4.3% revenue growth, 4% volume growth and onsite growth of 6.8%. It's better than what we guided. We continue to believe that this is a normal year," he said.

They are not seeing a reduction in IT budgets of clients. "The concern or issue that we have is when IT budgets will be spent, that's where uncertainity is having an impact. So there may be delays in decision making."

"When you look at Europe, inflation and sovereign debt are two issues...We are seeing a flat growth enviroment, where our strategy is to expand our growth in the market, increase the footprint and proactively invest in France and Germany."

"We are investing in building out consulting and SI which has crossed 25% of our revenues. But bringing focus to that area will allow us to grow business provide services to business side of our client," he said.

Similarly, they are investing in product platforms and solutions and this allows them to take advantage of technology trends like cloud, mobility, among others and allows them to new business models for engagement like pay per use model.

"These models are different from how we work with our clients. When we develop a new application for our client,they pay upfront before the client uses the system. Here, we make the investments upfront and pay per usage....Different revenue models," Gopalakrishnan said.

"We are making smaller investments, not as the size of finacle."

For example i-enegage, social commerce platform, i-transform in the healthcare area, digital marketing-online and advertisements from Infy perspective impact will be felt in three to five years.

"But we have to make investments today. It will be measured by number of deals. Revenue will come in the next several quarters," he said.