Bangalore: Infosys Technologies Ltd beat street expectations with a 7.5 per cent rise in quarterly profit and raised its full year forecast as demand for outsourcing grows and pricing pressure eases.
India's second-biggest software services exporter, a trend setter for the industry, said business environment improved in the September quarter and pricing stabilised, but currency volatility was a worry.
"The global currency markets continue to be extremely volatile, even though we have seen some stability in the rupee against the US dollar this quarter," Chief Financial Officer V. Balakrishnan said in a statement.
The rupee has gained more than 12 per cent from a lifetime low of 52.20 hit in March and is up more than 4 per cent so far in 2009, and analysts expect the currency to rise further this year.
Infosys said revenue in dollar terms for the year to March 2010 would decline 1.0-1.3 per cent to $4.60-$4.62 billion, a smaller decline than its July forecast for a drop of 3.1-4.6 per cent.
India's nearly $60 billion outsourcing sector has been hit in the global economic downturn as its core financial clients slam the brakes on technology spending and demand sharp price cuts.
Indian firms are also facing rising competition from the likes of IBM and Accenture, who have raided their home turf as they look for growth outside their mature markets.
Nasdaq-listed Infosys, the first IT firm to kick off results, expects its earnings per share to fall 6.7-7.1 per cent in dollar terms for the full year, less than its previous forecast of 11.1-12.4 per cent drop.
Infosys, which develops applications, designs supply chains and offers backoffice services, said net profit rose to 15.40 billion rupees ($332 million) in July-September, its fiscal second quarter, from 14.32 billion a year ago.
A Reuters poll had estimated a profit of 15.11 billion rupees for Infosys, which counts Goldman Sachs, BT Group, Philips Electronics and BP Plc among its clients.
India's IT industry has thrived by providing services ranging from managing complex computer networks and call centres to software coding to maintaining technology operations.
Hopes for a business revival have risen in the last few months after firms including No. 1 ranked Tata Consultancy Services and Infosys won some large deals and said demand for price cuts had reduced.
But the rupee's rise this week to its highest level in more than a year against the dollar could squeeze margins for the sector, which gets more than half its revenue from North America.
Shares in Infosys, valued at about $28 billion, jumped 30 per cent in July-September versus a 39 per cent rise in the sector index and a 18 per cent rise in the broader market.
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