Infosys Reports 52% Profit Rise in Third Quarter
Infosys, India's second largest software BPO, reported a 52% jump in the third quarter, thanks to offshore outsourcing jobs, specifically from foreign banking and telecommunications companies.
This prompted the Bangalore-based company to lift its profit expectations for the third time since the start of the fiscal year in April last year.
Infosys said it expects earnings per share to rise to as much as 18.90 rupees in the quarter ending March 31. Sales may gain as much as 45 percent to 19.64 billion rupees, the company forecast.
The median estimate of nine analysts surveyed by Bloomberg was for a third-quarter profit of 4.78 billion rupees. Sales were forecast to rise to 19 billion rupees.
Infosys isn't the only Indian software BPO looking forward to a continued profit boom because of offshore outsourcing. Analysts predict that "2005 will be a toss between major investment plans and further consolidation, since the US elections silenced fears that the BPO backlash will intensify."
Salary hikes seems to be on the agenda for October, particularly for Satyam Computers Ltd. and Wipro employees.
At the same time, there is a concern that the rising rupee will prove to be a stumbling block in Indian BPOs' expectations.
The rupee rose 5.9 percent in the three months to December. Indian software firms, which earn most of their revenues from overseas, gain when the rupee falls. Broker CLSA reckons a 1 percent rupee appreciation shaves 30-35 basis points off their operating margins. But the impact of the rupee's strength would vary depending on companies' hedging strategies, analysts said.
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