It must have been a fearsomely competitive fourth quarter (to 31st March) for second-ranked India-based IT services firm, Infosys, as it barely scraped in on the top line with just 1% sequential growth to $1.6b, the low end of guidance. Nonetheless, this was still 24% higher yoy, and pushed FY revenues to just over $6b (+26%), a milestone they surely did not want to miss. Q4 operating margins slipped back a bit (as they usually do) to 29.0% - still top of the league – setting the year’s margins to 29.4%, down a point yoy but still a magnificent result.
Management is looking for 18-20% headline growth this year, which would push them comfortably past the $7b milestone. Under normal circumstances, this is about where we would have expected guidance to sit, given that fleet-footed Cognizant opened the bidding at 26% (see Cognizant to follow 40% growth year by another 26%). However, questions will be asked why management isn’t going for at least 26% - given that’s what they have just achieved – especially as CEO Kris Gopalakrishnan said he “expected the demand environment to be normal this year for the industry”. This time last year, management forecast 17% headline growth. Oh, the games management play.
There’s also been somewhat of a top management reshuffle at Infosys that has resulted in the resignation of HR director, TV Mohandas Pai, a long-timer (17 years) and prior Infosys CFO. Pai had recently been tagged as a candidate for COO, were incumbent SD Shibulal to take over the CEO role in the predicted regular round of top-team musical chairs.
The changes at Infosys seem to echo those at Wipro (see Wipro reverts to an India-centric world) which resulted in a number of high profile exits (more of which I have yet to reveal). There is clearly ‘something going on’ at the Indian majors – especially in Europe – and once reporting season is over, I will continue digging to find our precisely what!