Challenges in retail, energy and insurance sectors could results in “quarterly bumps” for India’s second-largest software services firm Infosys, its chief operating officer has said.
Speaking at the Citi India Investor Conference, Infosys COO U B Pravin Rao said the company would face volatility over the next few quarters, due to weaker spending from these sectors.
However, the Bengaluru-based company was still on track to meet its full-year constant currency revenue guidance of 11.5-13.5 per cent.
“We still remain confident of (our guidance of) 11.5-13.5 per cent. But at the same time, given the volatile nature of our business, given the propensity of our clients to react immediately to some of the volatility, we will expect some short-term or quarterly bumps and ups and downs, but for the year, we remain confident,” he said.
He added the guidance was based on factors like large deal wins, growth in top 10 accounts and good momentum in the fourth quarter that has usually been challenging for Infosys in the previous years.
“In the last couple of weeks, we have seen results from retail in both the US and Europe have not been good — it’s been probably the poorest that we’ve seen in recent times. At this stage we don’t know how retailers will react. At the beginning of the year… we were optimistic — now we’re a little bit watchful on the retail space,” Rao said.
He added the company continues to see challenges in the short-term in the insurance space.
“We have a good pipeline in financial services. Last year, barring insurance, financial services grew about 15 per cent and we expect that momentum to continue… manufacturing we continue to see good traction… energy continues to be a challenge, we don’t expect recovery to have much impact on the spends,” he said.
Rao said a surprise has come from the healthcare vertical.
“We are slowly starting seeing some headwinds because there is suddenly a great deal of pressure on cutting costs primarily because of patent expiry and deal pipeline and in addition, we are seeing some M&A action which is leading to deferment. (This is) probably something we didn’t anticipate in the starting,” he said.
The IT major shares plunged 4.2 per cent after the COO warned about potential volatility in revenue growth in the coming quarters.