Infosys lowers revenue target as IT services spending drops

Infosys, the largest IT services firm by revenue in India, said it is targeting revenue growth of 1-3.5 percent on a constant currency basis for fiscal 2023-24, down from its prior guidance of 4-7 percent.
Infosys Finacle at IT trade show
Research firm Gartner estimates that the size of the global IT services market will be $1,420.905 billion in 2023, clocking annual growth of 8.8 percent. In 2024, IT services market is expected to grow 11.6 percent to $1,585.373 billion.

India’s IT services companies have kicked off the earnings season on a weaker note, with market leader Tata Consultancy Services (TCS) warning of an uncertain demand environment, with smaller peers HCLTech and Wipro reporting and projecting muted growth, Reuters news report said.

Businesses are cutting back spending on discretionary IT projects amid steep inflation that stoked interest rates.

Infosys, a global leader in digital services and consulting, said its revenue in April-June rose 4.2 percent to $4,617 million.

Large deal TCV for the quarter was at $2.3 billion, with net new of 56.1 percent.

Infosys reported operating margin of 20.8 percent. ROE improved 180 bps to 32.8 percent. Infosys has retained operating margin guidance of 20-22 percent.

“We had a solid Q1 with a growth of 4.2 percent and large deals of $2.3 billion which helps us to set a strong foundation for future growth. Our generative AI capabilities are expanding well, with 80 active client projects. Topaz, our comprehensive AI offering, is resonating well with clients,” said Salil Parekh, CEO and MD of Infosys.

Infosys has revealed that the main industry verticals and their revenue contributions to total revenue are: Financial services (28.1 percent), Retail (14.5 percent), Communication (11.7 percent), Energy, Utilities, Resources & Services (12.9 percent), Manufacturing (14.1 percent), Hi-Tech (8.1 percent), Life Sciences (7.2 percent) and Others (3.4 percent).

Main regions that contributed to Infosys revenue are: North America (60.8 percent), Europe (26.8 percent), Rest of the world (9.7 percent), and India (2.7 percent).