Infosys, India’s second-largest software services exporter, cut the upper end of its annual revenue forecast, raising concerns about near-term demand for services provided by the $245 billion Indian information technology sector.
The company now sees full-year revenue growth at one per cent – 2.5 per cent excluding foreign exchange volatility, versus a prior view of one per cent -3.5 per cent. The company’s results come a day after industry leader Tata Consultancy Services also warned that clients were still hesitant to spend on discretionary projects amid inflationary pressures and high interest rates.
“Digital transformation programs and discretionary spends are low and decision-making is slow,” Infosys Chief Executive Officer Salil Parekh said. The company is seeing project ramp-ups being pushed to the back end of the year, Parekh said.
Infosys’ U.S.-listed shares fell 3.3 per cent in premarket trading, while its Mumbai-listed shares closed 1.9 per cent lower ahead of the results. Analysts said the company’s results were a sign that the IT sector is facing a slowdown as clients become more cautious about spending.
“We continue to see a significant amount of market hesitancy resulting in delayed revenue. This is driven by uncertainty about the economic cycle and the increasing conviction that a recession is likely in 2024,” Peter Bendor-Samuel, chief executive at research firm Everest Group, said.
He added that the industry is unlikely to see significant acceleration until the second half of next year.
Infosys also said that it is not going to campus for recruitments “at the moment”, after offering jobs to roughly 51,000 freshers in fiscal 2023.
The sources for this piece include an article in Reuters.