India's Infosys posts lower-than-expected profit rise

Jan 13, 2011, 10:15 GMT

New Delhi - Indian information technology major Infosys Technologies Ltd Thursday posted a 14.2-per-cent rise in net profit in the October-December quarter and cautioned that weak economic recovery in developed markets could further impact growth.

Bangalore-headquartered Infosys is India's second-largest software services firm and was the first to announce its quarterly results.

Analysts had projected third-quarter growth of 18 per cent and the disappointing results pulled down Infosys shares by over 4 per cent on the Bombay Stock Exchange.

The company, however, projected strong consolidated revenue of about 21 per cent in the financial year ending March 31.

Infosys, which includes the BT Group and BP Plc among its clients, said it had added 5,311 employees and 40 clients during the October-December quarter.

'The weaker economic recovery in developed markets, coupled with high unemployment and risk of sovereign default, could impact industry growth,' Infosys chief executive S Gopalakrishnan said in a statement.

'We are closely working with our clients as they fine tune their strategies for the future,' Gopalakrishnan said.

Growth has been sluggish for India's information technology industry with slow economic recovery in its main markets in the United States and Europe.

Infosys profits in the three months to December were affected by a strong rupee against the dollar and higher operating costs.

'Uncertainties related to sustainability of the global economic recovery could create greater currency volatility,' chief financial officer V Balakrishnan said.

India's largest software services company, Tata Consultancy Services Ltd, is expected to report earnings Monday and third positioned Wipro Ltd on January 21.

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