Infosys grows cloud business as US investigation looms

Services firm Infosys has reported a 13.6% increase in revenue to $2bn for the second quarter of 2013, ended 30 June.

Net profit for the quarter increased by 3.7% to $397m.

In its latest financial statement, the company said it had won more than 15 engagements across cloud services and big data projects. It was also invited to join the global Open Data Center Alliance (ODCA) as a contributing member to help define and strengthen worldwide industry standards to support enterprise cloud and big data requirements.

In March 2013, Infosys opened a service delivery centre in Munich for BMW to provide maintenance and operations services for the car maker's web infrastructure, content management, SAP, business intelligence systems and internal IT system.

Faced with slowing growth in the business outsourcing market, technology services supplier Infosys has begun an ambitious strategy to transform itself into a global provider of consultancy and IT services.

Download this six-page special report from Computer Weekly for details on Infosys, its strategy, products and services and financial performance.

Infosys reported revenue of $160m in financial services, $110m in the manufacturing sector, and $100m in energy, utilities, communication and services (ECS). Its retail, consumer packaged goods, logistics and life sciences group reported revenue of $120m.

The company is currently being investigated in the US for visa fraud, the outcome of which could materially affect its business.

In the financial statement, Infosys noted: “In the event that the US government undertakes any actions which limit the B-1 business visa program or other visa program that the company utilises, imposes sanctions, fines or penalties on the company or its employees, or undertakes any other actions against the company arising from the investigations or discussions that are currently ongoing, this could materially and adversely affect the company’s business and results of operations.”

Infosys posts strong revenue growth as markets recover

Infosys posted strong revenue growth in the second quarter as demand picked up in key markets including the U.S.

However, the Indian outsourcer’s net profit grew only 0.5 percent year on year as the company increased salaries for staff in India and elsewhere.

Profit was also affected by currency fluctuations, particularly the depreciation of the Australian dollar, and low staff utilization, said Ashok Vemuri, Infosys’ head of Americas, on Friday.

Revenue was close to $2 billion in the quarter, up by 13.6 percent year-on-year. Net profit for the quarter was $418 million.

Infosys has also maintained its earlier forecast for revenue growth of 6 to 10 percent for its fiscal year to March 31, 2014. The forecast does not, however, factor in an immigration bill in the U.S., which if passed in its current form could increase costs for outsourcers and lead to more work getting done offshore, Vemuri said.

The bill would among other things prevent companies with more than 15 percent of their U.S.-based staff on H-1B visas from placing those employees to work on-site for U.S. companies. It was passed by the U.S. Senate, but has encountered difficulties in the House of Representatives.

The strong revenue growth comes after a quarter when Infosys saw its revenue grow 9.4 percent, but profit decline by about 4 percent. Once the darling of investors, Infosys was seeing lackluster growth in revenue and profit compared to Indian competitors such as Tata Consultancy Services. This led Infosys’ co-founder and first CEO N. R. Narayana Murthy to return to the company as executive chairman on June 1.

In the U.S., Infosys benefited during the quarter from a recovery in the economy, and saw its business from the automotive sector grow strongly as car sales picked up, Vemuri said. Growth from financial services in the U.S. is still not as strong, while demand from Europe is still slow, he added.

The outlook is good for the company, as many large outsourcing deals come up for renewal in the industry, Vemuri said. The company’s “Infosys 3.0” strategy, which aims at a greater focus on reusable platforms and products, and high value services like consulting and systems integration, is paying off, he said. “In spite of an environment where discretionary spend continues to be challenged, we continue to grow our consulting and systems integration,” Vemuri added.

Infosys added 575 staff in the quarter, taking the total to 157,263 employees as on June 30. It also added 66 clients in the quarter.