Infosys Q1 net down 2% at Rs 1,488 cr

IT bellwether Infosys Technologies on Tuesday reported 2.42 per cent decline in consolidated net profit to Rs 1,488 crore (Rs 14.88 billion) for the first quarter ended June 30, 2010.

Infosys attrition climbs 16% in Q1

IT major Infosys Technologies on Tuesday said it has increased its head-count by 1,206 in the April-June period this year even as the company witnessed higher attrition during the quarter.

The company hired 8,859 employees in the first quarter this fiscal year, but attrition played a spoilsport and nearly 7,833 employees left the organisation during the same period leaving the employee net addition at just 1,206.

"With the market opening up, attrition has increased this quarter, said Infosys Member of Board and head (HRD and education and research) T V Mohandas Pai. He added, "We have taken several steps to reduce attrition, including a compensation hike and enhancing lateral hiring."

The company witnessed a 15.8 per cent increase in attrition rate in the first quarter of this fiscal from 11.1 per cent during the corresponding period in the previous fiscal. On quarter-on-quarter basis, the employee attrition rate in Infosys rose by 13.4 per cent from the January-March level this year.

As on June 30, 2010, Infosys and its subsidiaries have a total of 114,822 employees compared to 1,13,796 at the end of the March 31, 2010, it added.

"We have increased the gross hiring for the year from 30,000 to 36,000 in the first quarter... We have hired 8,800 employees as against of our guidance of 7,000 employees.

"We invested $16 million in visas because when we get into a growth mode, we should not be short on visas. So, we are making all the right investments to make sure that the growth is maintained," Infosys CFO V Balakrishnan said.

Headhunting firms had already warned the IT sector that in 2010 they were likely to see higher attrition. Executives search firm GlobalHunt India had said that with the revival of the job market, Indian companies would witness a significant jump in attrition levels, especially in information technology and business process outsourcing sector.

Notwithstanding the high attrition rates, Infosys continues to increase its new clientele. The company, which counts BT Group, BP Plc and Goldman Sachs among its clients, said it has added 38 clients during the last quarter.

Highlights:

• Consolidated results under IFRS for the quarter ended June 30, 2010


• Income was Rs 6,198 crore (Rs 61.98 billion) for the quarter ended June 30, 2010; QoQ growth was 4.3 per cent; YoY growth was 13.3 per cent


• Net profit after tax* was Rs 1,488 crore (Rs 14.88 billion) for the quarter ended June 30, 2010; QoQ decline was 7.0 per cent; YoY decline was 2.4 per cent


• Earnings per share* declined to Rs 26.06 from Rs 26.76 in the corresponding quarter of the previous year; QoQ decline was 7.0 per cent; YoY decline was 2.6 per cent


• *Excluding the income from investment in OnMobile Systems, Inc of Rs 48 crore (Rs 480 million) in Q4 FY10, the QoQ decline was 4.1 per cent towards net profit and earnings per share

Others

• 38 clients were added during the quarter by Infosys and its subsidiaries


• Gross addition of 8,859 employees (net addition of 1,026) for the quarter by Infosys and its subsidiaries


• 1,14,822 employees as on June 30, 2010 for Infosys and its subsidiaries

"While the global economic environment remains uncertain, we continue to see greater demand for services from our clients," said S Gopalakrishnan, CEO and managing director of Infosys.

"The challenge for the industry is to enhance the investment to grow the business, given the uncertainty in the environment."

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Business outlook

The company's outlook (consolidated) for the quarter ending September 30, 2010 and for the fiscal year ending March 31, 2011, under International Financial Reporting Standards (IFRS) is as follows:

Outlook under IFRS (Indian rupee) - consolidated**
Quarter ending September 30, 2010

• Income is expected to be in the range of Rs 6,563 crore (Rs 65.63 billion) to Rs 6,626 crore (Rs 66.26 billion); YoY growth of 17.5 per cent to 18.6 per cent


• Earnings per share is expected to be in the range of Rs 27.42 to Rs 27.95; YoY growth of 1.9 per cent to 3.9 per cent

Fiscal year ending March 31, 2011***

• Income is expected to be in the range of Rs 26,441 crore (Rs 264.41 billion) to Rs 26,885 crore (Rs 268.85 billion); YoY growth of 16.3 per cent to 18.2 per cent


• Earnings per share is expected to be in the range of Rs 112.21 to Rs 116.73; YoY growth of 2.9 per cent to 7.1 per cent

** Conversion 1 US$ = Rs 46.45
*** Excluding the income from the sale of our investment in OnMobile Systems, Inc of Rs 48 crore in fiscal 2010, the EPS growth is expected to be in the range of 3.7 per cent to7.9 per cent

Click on NEXT for outlook under IFRS (US dollar)...

Outlook under IFRS (US dollar)#
Quarter ending September 30, 2010

• Consolidated revenues are expected to be in the range of $ 1,413 million to $ 1,427 million; YoY growth of 22.4 per cent to 23.7 per cent


• Consolidated earnings per American Depositary Share are expected to be in the range of $0.59 to $0.60; YoY growth of 5.4 per cent to 7.1 per cent

Fiscal year ending March 31, 2011##

• Consolidated revenues are expected to be in the range of $5.72 billion to $5.81 billion; YoY growth of 19.0 per cent to 21.0 per cent


• Consolidated earnings per American Depositary Share are expected to be in the range of $2.42 to $2.52;YoY growth of 5.2 per cent to 9.6 per cent

# Exchange rates considered for major global currencies: AUD / USD - 0.86; GBP / USD - 1.50; Euro / USD - 1.23
## Excluding the income from sale of our investment in OnMobile Systems, Inc of $11 mn in fiscal 2010, the EPS growth is expected to be in the range of 6.1 per cent to 10.5 per cent

Click on NEXT to read about the awards Infosys received...

Awards and recognition

The industry has richly recognised Infosys' contributions and value additions this quarter. Its leadership building initiative got a fillip with BusinessWeek and Hay Group's 2009 survey ranking it tenth among the "Best Companies for Leadership".

In a poll conducted by FinanceAsia, it was voted the "Best Managed Company" in India by investors and analysts across Asia.

The poll also named it the best company in corporate governance, investor relations and corporate social responsibility.

Infosys won the 2010 Software Process Achievement Award, given by the IEEE Computer Society and the Carnegie Mellon University Software Engineering Institute, for its cost-effective, sustained, and culturally integrated quality and productivity improvement program.

It was ranked second in the International Association of Outsourcing Professionals '2010 Global Outsourcing 100'.

Infosys BPO was honoured at the Shared Services & Outsourcing Network 2010 North American and Australasian Shared Services Excellence Awards.

Infosys' manufacturing unit won the American Technology Award for Manufacturing Solution.

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Operations

Leading global companies continue to engage Infosys to manage their operations and ensure larger returns to scale for them.

Infy's expertise in manufacturing and operations helped it win a deal with a global telecom company. An European telecom major chose it to design, develop, deploy and maintain an agent desktop application.

Among the clients who opted for its product lifecycle management services are a leading oilfield service company and an agri-business major.

Innovation

Infosys has won major strategic projects this quarter on its strength and ability to innovate products and processes.

"As we continue to invest in solutions and new engagement models, we are witnessing increased demand for our services from clients," said S D Shibulal, chief operating officer. "Our volumes grew by 7.6 per cent during the quarter."