Infosys Q1 net profit down 2.4 pc at Rs 1,488 crore

Volatile forex rates, higher employee cost ate into companys profits

Infosys Q1 net profit down 2.4 pc at Rs 1,488 crore

The income for the quarter rose to Rs 6,198 crore as against Rs 5,472 crore,  registering a Y-o-Y growth of 13.3 per cent. Compared to the earlier quarter of March 2010, the profit in the latest quarter was 7 per cent lower while the revenue was up 4.3 per cent.  

Announcing the company’s financial performance Infosys CEO & Managing Director S Gopalakrishnan said “The global economic environment remains uncertain. We are seeing clouds in the horizon; we don’t know whether it is a cloud of hope or cyclonic storm. We are well prepared for any kind of situation.”  

Infy and its subsidiaries added 38 new clients during the April-June quarter taking the total to 590 active clients. Its top 10 clients account for 26 per cent of its total revenue.

“We have invested more in our services and offerings and we see greater demand from our clients. Our repeat business is more than 99.4 per cent and our products portfolios are also performing well,” said Chief Operating Officer & Director S D Shibulal. Further he said, North America accounted for 67.3 per cent of the revenue and Infy BPO continued to be a significant agency for growth.

Shibulal said “The currency volatility is a major concern for entire IT industry in the country. For the current fiscal year, our operating margin is likely to fall 150 basis points, while billing rates are likely to drop 2 per cent. Our flexible financial and operating model enables us to focus on high quality growth in the tough environment.”

High attrition

During the quarter under review, Infosys and its subsidiaries made a gross addition 8,859 people and more than 7,833 people left the firm, taking a net addition to 1,026. The total number of workforce in Infosys was 1,14,822 on June 30, 2010.

However, the Q1 of financial year 2010-11 witnessed 2.5 per cent increase in attrition as against last quarter resulting in its highest ever attrition rate of 15.8 per cent.

According to Infosys HR Head Mohandas Pai “during the  quarter more than 5,000 people left the company out of which 2,246 people left to join other firms, around 1,265 left due to personal reason, about 951 people left for higher studies and about 700 as part of involuntary action.” With the market opening up, attrition has increased in this quarter, said Pai. “One of the steps we are taking to reduce attrition is to enhance lateral hiring,” he added.

The company plans to hire more than 36,000 people during the current financial year, out of which majority will be through campus recruitment. Going forward, Infy raised its outlook for the current fiscal year, reflecting the confidence of the company based on the demand flow from the clients. For the quarter ending September 2010, income is expected to be in the range of Rs 6,563 crore and Rs 6,626 crore, registering Y-o-Y growth of 17.5 to 18.6 per cent.

For the fiscal year ending March 31, 2011, income is expected to be in the range of Rs 26,411 crore and Rs 26,885 crore, registering Y-o-Y growth of 16.3 to 18.2 per cent.

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