INFOSYS, India’s No 2 IT services provider, tightened its full-year revenue forecast on Thursday (Jan 11) after reporting a lower-than-expected quarterly profit on sluggish demand from clients amid global economic uncertainty.

The US$245-billion information technology (IT) sector, which had gained immensely from a pandemic-induced digital services boom, has been struggling in recent quarters as clients cut spending on non-essential projects amid inflationary pressures and recession fears.

Consolidated net profit fell 7.3 per cent to 61.06 billion rupees (S$978 million) in the seasonally weak third quarter from a year earlier. Analysts, on average, expected a profit of 61.67 billion rupees, as per LSEG data.

Infosys revised its revenue growth forecast for a third consecutive quarter to 1.5 to 2 per cent on a constant currency basis for the full year from 1 to 2.5 per cent previously.

“As we get closer to full year, the visibility gives us a similar outcome compared to last quarter,” Infosys chief executive officer Salil Parekh said in a press conference.

Clients were not showing any change in behaviour while allocating budgets for IT projects, Parekh added.

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“The troubles faced by India-based IT companies are not just transient but are reflective of deeper market and economic shifts,” said Hansa Iyengar, senior principal analyst of London-based tech consulting firm Omdia.

Revenue in the third quarter edged up 1.3 per cent to 388.21 billion rupees, topping the analysts’ average estimate of 387.13 billion rupees, as per LSEG data.

Operating margin was at 20.5 per cent, down from last year’s 21.5 per cent, largely due to wage hikes and furloughs. Infosys, however, retained its operating margin forecast for the full year at 20 to 22 per cent.

Large deal signings for Infosys for the quarter were at US$3.2 billion versus US$3.3 billion a year earlier.

Meanwhile, larger rival Tata Consultancy Services reported a better-than-expected increase in third-quarter revenue, helped by the strong performance in the UK. REUTERS