Infosys Ltd, India’s second-largest software exporter, fears its utilities business in North America could be under pressure as clients tighten their budgets.
In the first quarter of the current financial year, Infosys had seen cancellation of a project in the energy and utilities
(E&U) vertical in Europe that made it make a one-time revenue reversal of $15 million (Rs 80 crore).
“We are seeing huge pressures on the utilities business in North America and it may impact our revenues from this market in the segment. As the US economy is under pressure, most of the utilities companies in North America are under pressure and are not able to increase their rates,” Prasad Thrikutam, global head of energy, utilities, communications and services business unit at Infosys, told Business Standard.
He said the economic uncertainty in the US has forced many publicly-held utilities to cut down their investments.
“In the US, most of our utilities clients are from the government sector and there is a sentiment against offshoring as the job situation in the country has not improved,” he added.
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But in Europe, despite the pressure, the company was expecting the E&U business to grow as “companies are looking at offshoring to cut down the cost”, Thrikutam added.
According to Pradeep Udhas, partner and national head IT-BPO sector, KPMG, the utilities in the US are struggling at a time when the country is witnessing a slow recovery. “The income of the utility companies has also come down,” he added.
North America is so far the biggest market for the offshore-centric IT services companies. Infosys has more than 20 clients in the utilities sector in North America. E&U business accounts for about 4.6 per cent of Infosys’ overall revenues.
Infosys, however, is optimistic about the growth of its energy vertical where the company is able to open new accounts.
“We are seeing an increase in the adoption of technologies by the companies who are into oil exploration, and this would help our growth,” said Thrikutam.