Mumbai: Software firm KPIT Cummins Infosystems Ltd expects lower revenue in 2009-10 but hopes to maintain profits, a top official said on Tuesday.
Late Monday, KPIT said net profit for the year-ended March 2009 rose over 28% to Rs658.5 million, while revenue rose 36% to Rs7.93 billion.
“Revenue may decline. Profit may sustain or even improve from current levels,” managing director Kishor Patil told Reuters in a telephonic interview on Tuesday.
“There will be pressures, reductions in the projects companies will take up. The environment is uncertain which is why we are not giving an outlook for the year,” he added.
The global downturn has taken a toll on earnings of local IT firms as US and European firms cutback on technology spending or demand lower rates and the country’s top three software service firms have given gloomy outlooks for coming quarters.
Research firm Gartner has predicted a 3.8% fall in global IT spending in 2009 with outsourcing prices seen dropping 5-20% through 2010.
KPIT’s revenue may decline because of the reduction in IT budgets of customers and the movement of more work to offshore from onsite, said Patil, who is also the company’s chief executive officer.
The revenue share of offshore services may climb to 60% by fiscal year end, from 55% last year, he added.
KPIT is witnessing pricing pressure from customers in the United States, which contributes about 55% of total revenue, and he expects revenue from this region to moderate, said Patil.
KPIT offers software services to manufacturing industries, especially automobile, industrial and farm equipment and semiconductors.
Growth for the company will come from rise in electric and hybrid cars, high-end infotainment and the BRIC (Brazil, Russia, India and China) nations, Patil said.
“Europe, we hope will outsource more,” he said. The region currently contributes about a third of the company’s revenue.
KPIT was moving towards more fixed-price contracts from variable contracts to help profits, which will also be propped by reduction in variable pay of employees, deferring new campus recruits and hiring, he added.
The Pune-based firm posted an 86 percent jump in March-quarter net profit to Rs193.2 million.
“We hope the next quarter will be the bottom ...(and) see a slow recovery in the second half of the year,” said Patil.