Infosys Boosts Sales Forecast Despite Economic Uncertainty

Infosys Ltd. raised its annual sales forecast, remaining upbeat on large clients’ need to automate their systems and cut costs even as it warned of pockets of uncertainty because of a global economic downturn. The company said it expects sales to grow between 12 and 14 percent in the fiscal year ending March 2020, up from its previous forecast of 10-12 percent growth.
Infosys has announced that it expects its revenue to grow by between 16% and 16.5% in the next financial year. This is an increase on the company's previous projection of 15% to 16% growth, and is in line with analysts' expectations of 21% growth. According to Infosys CEO Salil Parekh, the upgrade is due to the strong performance of the company in the first nine months of the current financial year, with a 17.8% growth in constant currency.
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Sales at Infosys and Tata Consultancy Services, two of India's largest IT companies, have soared over the past two years as global enterprises have increased spending on software services to meet demand during a pandemic-fueled boom.
The growth of India's $227 billion outsourcing industry is now cooling as employees return to the office and global recession fears increase. IT services giant Accenture Plc. kept its full-year growth forecast unchanged after its first-quarter bookings missed estimates.
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In the long term, analysts expect companies to continue to adopt more digital workflows to keep up with technological shifts in cloud, big data, machine learning and artificial intelligence. This will bolster the sales of Bengaluru-headquartered Infosys and its rivals.
Infosys reported a 13% increase in net income to 65.9 billion rupees ($808 million) in the October-December quarter. This was higher than the average analyst estimate of 64.65 billion rupees. Sales also increased during the quarter, reaching 383.2 billion rupees.
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"There are signs that the global economy is slowing down," said CEO Parekh. "Some sectors, such as mortgages and investment banking in the financial services industry, telco, high-tech and retail, are more impacted and this is leading to delays in decision making and uncertainty in spending in these areas."
According to Bloomberg Intelligence, the company's analysts believe that the stock has potential to grow. They say that the company is well-positioned to capitalize on the growing demand for streaming content.
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Infosys is forecast to see low double-digit sales growth in constant currency in fiscal 2023, driven by strong demand for cloud services. This is lower than the 19.7% growth seen in fiscal 2022, but is due to tougher comparisons and rising recession risk, rather than competition.
Anurag Rana is an analyst who is known for his work in the field of finance.
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TCS, headquartered in Mumbai, reported a 11% rise in quarterly income, but warned that client sentiment was cautious. As Asia's largest outsourcer, TCS is closely watched for signs of how the global economy is faring.