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(Photo: Reuters)
(Photo: Reuters)

Covid-19: Infosys refrains from revenue guidance, freezes hiring and salary hikes

Infosys management said that it has suspended all hiring, promotions, and salary increments this year as measures to control costs

Bengaluru: Infosys Ltd, India’s second largest software exporter by revenue, on Monday followed the trend set by its peers by refraining from projecting revenue growth guidance for FY21, on the back of the impact of Covid-19.

Last week, Wipro Ltd refrained from giving quarterly guidance, and others such as Cognizant have withdrawn its earlier guidance due to the uncertainties in business environment.

“Considering the business uncertainty emanating from covid-19, the company is unable to provide guidance on revenues and margins for FY21 at this stage. The company will provide guidance after visibility improves," Infosys said in a statement.

Infosys’ management also said that it has suspended all hiring, promotions, and salary increments this year as measures to control costs. The company, however, said it will honour all job offers made so far. U.B. Pravin Rao, chief operating officer, said in an earnings call, that they have made around 35,000 offers for FY21, which will be honoured.

The net profit of Infosys for the fourth quarter stood at 4,335 crore, down nearly 3% q-o-q though it was up 6.3% on an annual basis, aided by lower taxes and higher other income.

The Bengaluru-based IT firm’s revenue during the March quarter grew 0.8% sequentially and 8% y-o-y to 23,267 crore on the back of strong growth in digital revenues which stood at $1.34 billion (41.9% of total revenue), with y-o-y growth of 31.7% in constant currency terms, although they are beginning to see “pressure in discretionary spending."

The closely-watched dollar revenue declined 1.4% sequentially but grew 4.5% y-o-y to $3.19 billion on the back of large deals worth $1.65 billion signed during the quarter.

Operating margins for the January-March period stood at 21.1%, a marginal decline from 21.9% in the previous quarter ended December.

“While the immediate short-term will be challenging, looking ahead, we can see that there is a strong interest to consolidate with partners with high-quality and agile service delivery and strong financial resilience. I am confident we will emerge from this stronger," said Salil Parekh, CEO and MD, Infosys.

The attrition rate in the fourth quarter stood at 20.7%, up from 19.6% in the October-December quarter although the management indicated during the earnings call that most of them were “performance-based exits."

Financial services and retail segments contributed close to half of the revenue for the fourth quarter. While revenue from financial services grew 5.7%, retail revenues grew 4.2% year-on-year in constant currency terms. The management however said that these verticals will be under pressure in the coming quarters due to the impact of Covid-19.

Infosys has just come out of an internal crisis after obtaining a clean chit from the US Securities & Exchange Commission (SEC) in the whistleblower case that accused company’s top management of being involved in “unethical practices" to boost revenue and profit for many quarters. During the Q3 earnings, Infosys clarified that its audit committee found no evidence of financial impropriety or executive misconduct.

The company declared its fourth quarter earnings after market hours on Monday. The shares of Infosys were up 3.8% to close at 652.90 on the BSE.

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