Infosys Technologies’ weaker-than-expected results sparked concerns over growth rates of India’s showpiece outsourcing sector as the company flagged a sluggish global economic recovery and currency volatility.
Shares in India’s No. 2 software exporter fell more than 4 percent to their lowest in over three weeks after its sales growth forecast for the year to March also failed to meet market estimates, a rare miss for a company known for its conservative outlook.
“The challenges to the sector are primarily rupee volatility, which doesn’t seem to be going down in a hurry,” said Arun Kejriwal, strategist at research firm KRIS. “My concern increases because oil prices are still rising rapidly, putting pressure on economy and rupee.”
Infosys, which began results for the country’s US$60 billion IT services industry, cited the economy as a key risk.
“I am very concerned and deeply worried [by the currency fluctuation] because world over, all the economies are going through troubled times,” Infosys chief financial officer V. -Balakrishnan told -reporters. “I think the markets are going to be overly concerned about all the sovereign risks that is going to create extreme volatility in currency.”
Infosys, which counts Goldman Sachs, BT and BP among its clients, expects its dollar revenue to rise 25.7 to 26.1 percent in the year ending March, below analysts expectations of 27 to 28 percent.
The revenue growth forecast was, however, higher than 24 to 25 percent rise forecast by the company in October.
Analysts said the possibility of a sharper appreciation in the rupee, rising wages and intensifying competition from global firms such as IBM, Accenture and Hewlett--Packard were also risks for export-driven Indian outsourcers.
Infosys and its rivals, Tata Consultancy and Wipro, have been on a hiring spree in recent quarters and have given pay hikes of up to 20 percent to fight poaching by global rivals — raising hopes of a sharp pickup in outsourcing demand.
Global spending on technology is likely to rise 5 percent to US$3.6 trillion this year, research firm Gartner said in a recent report, more than its previous estimate as the dollar’s weakness helped push IT spending beyond its forecast for last year.
Infosys shares, valued at about US$42 billion, fell in a broader Mumbai market down 0.5 percent. Shares in tech rival Tata Consultancy were up more than 1 percent.
“The weaker economic recovery in developed markets coupled with high unemployment and risk of sovereign default could impact industry growth,” Infosys chief executive S. Gopalakrishnan said in a statement.
Infosys said net profit the fiscal third-quarter ended last month rose to 17.8 billion rupees (US$396.4 million) from 15.6 billion rupees a year ago. This compares with a Reuters poll of 18.2 billion rupees.
The company added 40 new clients in the quarter ended December, its strongest pace of quarterly customer addition in three quarters. However, revenue contribution from the US, its biggest market, fell to 64.7 percent from 65.8 percent.
Infosys shares climbed 13 percent in October-December, lagging a near 15 percent rise in the sector index and outpacing a 2 percent gain in the main index.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day