Infosys Q2 results buck economic downturn

Outsourcing giant Infosys has posted its Q2 results, stating that revenues grew 19 percent year on year.

Second-quarter revenues were $1.2bn (£712m), while year-on-year overall growth was 16.7 percent. Infosys and its subsidiaries added 40 new clients during the quarter, the company said.

BG Srinivas, Head of European Operations at Infosys, told ZDNet.co.uk on Friday that Infosys's growth had been due to its portfolio and services.

"We have a diverse portfolio and a comprehensive range of service offerings," said Srinivas. "We believe our business model is sound and strong."

Srinivas said that while the rupee's loss of value against the US dollar in Q2 had had a positive impact on Infosys's growth, other factors such as the fluctuation of the US dollar, the pound, and the Australian dollar in the current economic downturn had also had an impact.

"Revenues in real dollar terms have grown," said Srinivas. "The rupee added to growth, but even if you knock off the impact of the rupee, it's very good growth. The US dollar, the British pound and the Australian dollar all took a beating, to the extent where 30 percent of revenues were impacted. If you add that back the sequence of growth was even higher."

The current turmoil in the economic markets has had an impact on the speed of the take-up of new contracts, said Srinivas.

"In the financial sector, due to nationalisation and changes of leadership, we've seen a bit of a slow down on decisions on new IT projects," said Srinivas. "We have not seen any significant contract renegotiations."

While the current economic instability could have an impact on business in the near future, said Srinivas, he expected the long-term prospects to be good.

"To some degree, because of market instability, we believe there will be short-term challenges. In the medium to long term we'll continue to grow," said Srinivas.

Indian trade body the National Association of Software and Service Companies (Nasscom) warned in September that the continuing "turmoil" in the US financial markets would be likely to have a negative effect on Indian business process outsourcing (BPO) contracts, in the short term.

Srinivas added that, due to market conditions, he expected to see consolidation in the outsourcing industry.

"I would say consolidation is likely to happen in Europe and the US," said Srinivas. "There are always opportunities for consolidation during these times. Infosys has a solid balance sheet, and there are always opportunities to look at."

Infosys plans to expand its consultancy and BPO operations, which could be achieved through acquisitions, said Srinivas.

Infosys agreed terms to buy UK-based SAP consultant Axon Group for £407.1m in August.