Infosys slashes FY17 guidance due to challenges in banking, financial services

Infosys has slashed its annual revenue growth outlook for the second time this year to 8-9 per cent, underlining the challenges faced by the IT industry especially in verticals like banking and financial services.

Apart from Infosys, players like Tata ConsultancyServices and Mindtree have also pointed towards weakness inthe financial services sector and project delays andcancellations that could impact the growth of the USD 110billion IT services sector in the near term.

Infosys, which posted a revenue of Rs 17,310 crore or USD539 million in the September quarter, expects growth of 8-9per cent in constant currency. At the beginning of 2016-17 fiscal, Infosys had projectedan annual revenue growth of 11.5-13.5 per cent. It latertrimmed the forecast to 10.5-12 per cent in July.

"While we continue to navigate an uncertain externalenvironment, we remain focused on executing our strategy andincreasing momentum of our software plus services model.Considering our performance in the first half of the year andthe near-term uncertain business outlook, we are revising ourrevenue guidance," Infosys CEO Vishal Sikka said.

He added that the company is operating in a "duallyvolatile atmosphere"."We have mentioned some of the client behaviour relatedmatters such as the RBS decline that we had, similarly some(other) client specific things...those have contributed to ouroutlook on the remainder of the year and that is what we seeand that is what we have shared," he said.

TCS, which announced its second quarter results on Thursday, said it has been facing softness from BFSI clientsfor some time and expects it to be so in the remaining partsof the current fiscal year, resulting in temporary impact onthe sector's IT spending. On Infosys' 2020 aspiration, Sikka said the company is"sticking" to the plan.

"What is the point of an aspiration if it is notsomething that we can't aspire to. We are sticking to that --USD 20 billion (revenue), 30 per cent margins, USD 80,000revenue per employee... the future cannot simply be anincrement of the present and the future is something that wehave to set a target that if we are able to execute on ourtransformation, then what is the number that we aspire for,"he said.