InfoSys Results Highligh Demand For Off-shoring / Outsourcing
posted in Outsourcing News and Top Outsourcing deals |Source: Economic Times
A strong showing by Infosys Technologies for the fourth quarter ending December 2006 has reaffirmed the optimistic outlook for the rest of the Indian technology firms slated to announce their results.
Much of the cheer comes from a confirmation of the healthy demand environment for technology firms and the trend towards higher off-shoring reflected by the sequential double-digit growth in dollar revenues that Infosys posted for the quarter.
Although, there were no huge positive surprises like in the second quarter, the company improved its operating margins by 60-basis points despite a 3.8% appreciation in the value of the rupee and fewer working days during the December quarter. “There are no negative surprises in the results. Fiscal 2008 should also be good, although guidance will be given only in the next quarter,” confirms an IT analyst with a brokerage firm.
“The results of other large companies will be in line with expectations. I see no reason to change them,” says Sandeep Shenoy, strategist, PINC Research. “Despite the swing in rupee, Infosys has been able to manage its margins and improve the billing rates. The improved billing rates coupled with more business volumes should see good growth in the coming quarters,” he said.
Based on the projected FY-07 earnings, top tier companies in the sector are trading at a price to earning multiple of 30. The industry is projected to grow at 30% annually and the P/E is in tune with this.
Involuntary attrition or attrition because of employees leaving for reasons other than moving to a different firm, was 1.3% for Infosys in the third quarter leading to a higher than expected 13.9% attrition for the company.
