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Perhaps the only shred of comfort that management at Bangalore-based IT services firm Infosys can take from its FY results is that it is still the second largest India-centric offshore services player – just! With Q4 revenues (to 31st March) a 'miss' at $1.94bn, Infosys undershot its FY target of "at least" $7.45bn, ending the year 5.8% higher at $7.40bn. This compares to near-16% growth the prior year. US headquartered (but with its beating heart very much in India) Cognizant– which had already topped Infosys' revenues for the prior three quarters – ended its FY (31st Dec.) with revenues 20% higher at $7.35bn (see Cognizant sets sights on slower 2013).
And that's the other thing that disappointed. Infosys management set its sights on growth for FY14 at between 6% and 10%, lower than the market expected and well under the 12-14% 'export' growth rate forecast by Indian industry association Nasscom. In stark contrast, Cognizant is looking for at least 17% annual growth. Clearly the second rank tiara (TCS wears the top rank crown) will change heads this year. Infosys shares plummeted 18% on the news.
This is not the most auspicious start for a company once seen as the gold standard of execution excellence in offshore IT services. Many of its top-tier peers have been doing better so the problem must lie in the strategy. Lost plots need to be rediscovered!
More as other India-based players report their results over the next week or so.
