INFOSYS reported lower-than-expected fourth-quarter revenue on Thursday (Apr 18), in a seasonally weak period for India’s No 2 IT services provider, as cautious clients curtailed spending amid macroeconomic uncertainties.

Revenue rose 1.3 per cent to 379.23 billion rupees (S$6.2 billion) in the January-to-March quarter, compared to analysts’ expectation of 386.24 billion rupees as per LSEG data.

For fiscal year 2025, Infosys forecast revenue growth between 1 per cent and 3 per cent in constant currency.

India’s US$254 billion IT sector has been struggling in recent quarters as clients cut spending on non-essential projects amid inflationary pressures.

This has led companies to accept tougher contract terms to win large deals, while grappling with clients renegotiating, delaying or cancelling contracts, resulting in a sharp slowdown in the industry’s growth from the pandemic-fuelled boom a few years back.

Infosys’ consolidated profit rose 30 per cent to 79.69 billion rupees for the quarter.

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The company reported a decline in growth in the financial services and retail verticals, but CEO Salil Parekh said he expects fiscal year 2025 to be better for financial services.

Infosys’ largest market, North America, reported a revenue decline of 2.1 per cent.

The company’s operating margin for the quarter contracted 90 basis points year on year to 20.1 per cent. For fiscal year 2025, the company forecast its margins in the range of 20 to 22 per cent.

“There’s been a good traction with the cost, efficiency, consolidation nature of large deals. Whereas we see that digital programmes or discretionary work is still not as visible within the work we’re seeing,” Parekh said.

The macro environment had a “mixed outlook”, he added.

Large deal signings for the fourth quarter stood at US$4.5 billion versus US$2.1 billion a year earlier.

Tata Consultancy Services, India’s top IT services provider, said last week that weak spending continued to be an overhang, as it reported lower-than-expected fourth-quarter revenue. REUTERS