India’s second-biggest IT services firm Infosys has surprised the market with better-than-expected results, with a continued focus on consultancy and platform as a service (PaaS) paying off.
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There was talk in the Indian press of Infosys making thousands of underperforming staff go amid tough business conditions.
The company reported $1,9bn in sales for the three months ending December 31. This was 6.3% higher than the same period a year ago and growth was 5.8% more than the previous quarter.
Profit increased $3m to $434 million in the quarter compared with the same quarter last year.
BG Srinivas, global head of Infosys’ financial services business who also heads the European business, said the customer spending is still cautious. “There are headwinds, particularly because customers’ discretionary spend is coming under pressure."
But in areas where customers can cut costs, there have been significant wins. He said the company performed well as a result of deals signed in the previous quarter gaining momentum, an increase in customers investing in its Finacle core banking platform, as well as success in growing its consulting and system integration (CSI) business.
CSI now accounts for 32.6% of Infosys total business, but this will increase as the sales of management consultancy Lodestone which it acquired are taken into account.
Another growth area, which complements CSI is the sale of platform as a service (PaaS). The recession has driven customers to look for more flexible ways of paying for services.
As a result there is interest from customers in Infosys. Srinivas said in the last quarter there has been strong demand for its ProcureEdge procurement platform, its Brand edge marketing system and its CreditEdge financial services offering, which are delivered via a private cloud.
The surprising results have boosted they companies share price.
According to a report on Indian website the Economic Times last week, 5,000 staff could be cut.
But an Infosys spokesman said: "Last week, an article in a major daily newspaper claimed that Infosys is laying off 5,000 people to manage costs.
"Infosys is a performance-driven company. And like any performance-driven company, it actively manages underperformance and encourages chronic under-performers to seek other jobs. This is done regularly and is not a one-time event. We have a robust performance management system that includes structured appraisals and performance feedback.
"The number that may be affected is significantly lower than the 5,000 quoted in the article. For a performance-driven company with more than 150,000 employees, this is part of the normal ebb and flow of running a business."