Giving a peek into its client mindset in the US, Infosys on Friday said its clients continue to look for cost-cutting steps even as decision cycles were getting delayed by a few weeks.
Ashok Vemuri, who heads the country’s second largest IT services provider’s two most important units -- Head Americas and Global Head Financial Services and Insurance, said there had so far been no cancellations, expect for some delay in decision-making. “Companies are still wanting to cut cost, but at the same time they are looking for validation for their decision from higher-up offices,” he said. “Hence we are seeing a delay of 10 to 14 days.”
When it comes to discretionary spends, though, Vemuri said the clients had become “extremely tight”.
In many cases, he said, the clients had said they would spend on need basis. “Rather, they are asking us to move to the revenue side of the balance sheet and come up with solutions and services that give them quick business benefits,” he added.
Infosys Q2 results beat market estimates as the it added 45 clients, one of its highest in this quarter.
Vemuri also believes that even though Greece defaulting on its debt is inevitable, the impact of this on the European banks in terms of IT budgets would be low. “European banks and the financial sector will react slower to the happenings. Unlike their counterparts in the US who have seen and learnt from the 2008 slowdown, European banks will have to put in a strategy that will allow them to tackle the impact,” he added.
The 1981-incorporated company is already seeing this move to increase offshore. During the quarter, Infosys added 10 new accounts from Europe. “In all these accounts there is a substantial push towards offshoring. Rather in geographies like Continental Europe were language was a barrier we have been able to overcome these,” he said.
According to a Citi survey of 260 CIOs, outsourcing trends suggest that CIO’s in US and Europe exploring outsourcing additional functions or currently ramping incremental projects declined to 39 per cent from 43 per cent on a quarter-on-quarter basis but are still up 10 percentage points from a year-on-year basis.
Vemuri agreed that the October- December quarter would be significant in terms of the deal that are coming up. “This time the Q3 quarter will be big due to the deals that are coming up for renewal. But we will participate in only those that are in line with our focus of high quality. There are enough deals that do not fit on those parameters,” he added.
The company reported net profit growth of 9.7 per cent at Rs 1,906 crore year-on-year, while the revenue grew 16.6 per cent -- to Rs 8,099 crore.
