Infosys Fears rough Patch in 2008 H1

The first half of calendar year 2008 may be tough for Infosys Technologies, with the June quarter expected to be weaker than the March quarter, according to CEO S Gopalakrishnan.

Gopalakrishnan who met analysts of Credit Suisse Asian Equities Research recently agreed that in the event of recession in the US, the first half of calendar year 2008 could be weak, but growth could pick up from the September quarter.

The Credit Suisse report on Infosys Technologies, based on the meeting with Gopalakrishnan, indicates that their guidance process builds a slack on the bottom-up and top-down calculations.

The company indicated that the environment still remains good though there could be short-term weakness in case US falls into a recession. However, any economic slowdown could be short term, and the US economy should bounce back in the second half of the year.

The management guidance is based on bottoms-up and top-down analysis. First, all accounts are analysed to get a feel of assured business. Then prospective clients are analysed for sure-shot business. The resultant number is then cross-checked with top-down estimates of industry and sector growth.

In the event of a slowdown, the company would be able to react quickly and commit resources to other growth areas such as new large accounts or inorganic initiatives. This should lead to robust growth post the June quarter.

Regarding client budgets, the Infosys management said some budgets are flat year-on-year while there have been cuts in a few cases. They added that the general opinion is to increase offshoring while there may be some quarterly delays in projects.