Outsourcer Infosys reports strong quarter

The outsourcer brought back its first CEO to help revive the company

Indian outsourcer Infosys reported revenue and profit growth in the first quarter, but is still troubled by strong staff attrition and key management changes.

Revenue in the quarter was $2 billion, an increase of almost 8% over the same quarter last year, according to IFRS (International Financial Reporting Standards). Net profit grew by 9.7% to $487 million.

The company's year-on-year revenue growth is far below that of the rest of the industry, said Sudin Apte, CEO and research director at analyst firm Offshore Insights. He pointed out that the company's revenue had declined from the previous quarter.

Infosys' CEO and managing director, S.D. Shibulal said in a webcast that the quarter had been disappointing. The company faced a slow-down in market segments such as retail, and even cancellations in some business segments.

For its fiscal year ending March 31, Infosys reported revenue of $8.2 billion, up 11.5% year on year, while net profit grew 1.5% to $1.7 billion. The company has forecast revenue growth of up to 9% for its current fiscal year.

Infosys brought back N.R. Narayana Murthy, its co-founder and first CEO, as executive chairman in June last year to turn around the company, which has been lagging behind most of its key competitors.

But the company also saw a number of key executives leave. "The frequent changes have generated uncertainty in the organization which is now affecting clients as well," Apte said.

A high staff attrition rate of 18.7% is also worrying customers who won't like to see one in five people working on their projects leave the company, he added.

The next challenge for the company is to find a successor to Shibulal who intends to leave before January next year.

Infosys added 50 clients during the quarter and 238 during the year. The company had 160,405 employees at the end of the quarter, after adding 2001 staff in the quarter.

North America is the largest market for Infosys, accounting for nearly 60% of revenue, followed by Europe with over 25% revenue share.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

To express your thoughts on Computerworld content, visit Computerworld's Facebook page, LinkedIn page and Twitter stream.
Windows 10 annoyances and solutions
Shop Tech Products at Amazon
Notice to our Readers
We're now using social media to take your comments and feedback. Learn more about this here.