Worries for Indian IT on Infosys profits

INFOSYS Technologies sparked concerns about the outlook for India’s showpiece outsourcing sector after it missed estimates for profit and future sales growth and warned of sluggish global economic growth.

best of the brokersShares in India’s number two software exporter, which boasts fatter profit margins than its rivals, fell 4.2 per cent and were set for their biggest fall in nearly a year and a half.

best of the brokersInfosys and its rivals Tata Consultancy and Wipro have been on a hiring spree in recent quarters and have given pay hikes of up to 20 per cent to keep staff, raising hopes of a sharp pickup in outsourcing demand.

best of the brokers“We are particularly disappointed by Infosys’ revenue growth forecast and if Tata Consultancy manages to post better results than Infosys, then people will switch over from Infosys because valuations for others look relatively attractive,” said Taina Erajuuri, Helsinki-based portfolio manager at FIM India.

best of the brokersFIM India owns shares in Infosys and Tata Consultancy in its portfolio.

best of the brokersInfosys, whose sprawling Indian campuses house pizza and Subway outlets and golf courses, was the first to kick off results for the country’s $60bn (£38bn) IT services sector.