Infosys on Sunday, July 24, said that the demand outlook is good, amid macroeconomic uncertainties.
While there have been concerns about an impact on IT spending and a dent in demand due to an increase in interest rates and looming fears of a recession, Chief Financial Officer Salil Parekh said after the company announced its results for Q1FY23.
Parekh added that large deals — over $50 mn in size — are usually volatile, and the overall pipeline for large deals is larger than in the last three and six months. He added that in their pipeline, they have a good demand outlook on large deals within the US and European markets.
“There is talk of recession, there is an increase in interest rates. There are some pockets where we see this. For example, in the mortgage business in our financial services area. But, the view for us today given what we see in our pipeline is that the overall pipeline is strong at this stage. We are watching out for what can happen as the environment evolves and changes,” he said.
Parekh said the demand and strength in terms of overall growth and volume growth is what gave the firm the confidence to increase its revenue guidance. Infosys upped its revenue growth guidance to 14-16 percent from 13-15 percent for FY23.
He added that the firm is seeing two types of demand — digital transformation and those focused on cost and efficiency.
We have both of those within our mix and as we looked at this, even in the previous month, we've made sure that our focus remains on both types of programs. We feel in terms of automation, we have a tremendous capability that we think will be of great use to clients in any environment as they look at making efficiency within the tech landscape,” Parekh said.
However, Infosys maintained its margin guidance for the year 21-23 percent, and expect to remain at the lower end of that range.
During the company’s Annual General Meeting (AGM) last month, CEO Salil Parekh allayed shareholder fears’ regarding the impact of the recession. Parekh had said that the company’s pipeline was strong and that they are “well-poised” to work with clients.
Most of Infosys’ peers struck a note of caution, but Infosys’ rival Wipro was upbeat and said there was no slowdown in spending, bookings were strong and the deal pipeline is robust.
“Despite the uncertainties of the macroeconomic environment, if I look at our pipeline, our order booking, and the discussion we are having with our customers, there has been no slowdown or pullback of spends for us. The demand for IT services is robust,” CEO Thierry Delaporte had said.
TCS CEO Rajesh Gopinathan had said that the company is vigilant due to macro-level uncertainties despite pipeline velocity and deal closures remaining strong.Mindtree CEO Debashis Chatterjee had said there were instances of some clients who had been impacted due to their exposure to Ukraine and Russia deferring opportunities.