Infosys Feels IT-Outsourcing Pressure (INFY)

Jon C. Ogg

Infosys Ltd. (NASDAQ: INFY) is the king of IT-outsourcing in India, but today that king is finding itself under fire.  The company said that it sees 8% to 10% for the year ending in March 2013 with a dollar-adjusted level of $7.55 billion to $7.69 billion.  Analysts were looking for at least 10% growth and as much as 15% growth.

For the quarter which just ended, Infosys profit rose about 27% to $449 million on an adjusted basis and the results were more or less in-line with estimates in India.  The company also ended the quarter with about $4.1 billion in cash on a converted basis.

Some hope may be on the way as better clarity comes into play in the next couple of months, but the news is clearly being taken as a negative with slower growth rates coming. Some of the issues around the company’s weak forecast are the outsourcing of jobs argument in America ahead of the election, a slow environment in Europe, and a slowing global growth story.  Close to 75% of Infosys’ business is derived from the U.S. and Europe.

The stock is paying a steep price for having a disappointment today as shares are indicated down 14% at $48.88 after closing at $56.77 on Thursday.  The 52-week trading range is $46.12 to $68.52.  Wipro Ltd. (NYSE: WIT) is lower as well with an indicated drop of about 2.6% to $10.49.