India's Infosys brushes off virus disruptions as profits rise

·2 min read
Infosys put a profit rise down to travel expenses coming down, cutting back on branding and marketing, and aggressive rate negotiations

Indian software giant Infosys reported an 11.4 percent rise in quarterly net profits Wednesday, winning valuable client deals in Western markets despite coronavirus-led disruptions. The Bangalore-headquartered firm posted a net profit of 42.33 billion rupees ($563.8 million) for the quarter ended June 30, an increase from the 37.98 billion rupees recorded a year earlier for the same period. Infosys said it secured deals worth $1.74 billion during the period, higher than the $1.65 billion reported in the previous quarter. The firm also benefited from the Indian rupee's depreciation against the US dollar. India's decision to impose a months-long nationwide lockdown in March caused huge disruption across the IT sector, forcing firms such as Infosys to rapidly adopt a work-from-home model to cater to Western clients, and raising operational costs. "First was to see how can we avoid cost increases... Travel expenses came down and we cut back on branding, marketing and did some aggressive rate negotiations," Infosys Chief Financial Officer Nilanjan Roy told a press conference. Revenues rose to 236.65 billion rupees -- an increase of 8.5 percent -- the company said. "Our Q1 results, especially growth, are a clear testimony to the relevance of our service offerings and deep understanding of clients' business priorities which is resonating with them in these times," Salil Parekh, Chief Executive of Infosys, said in a statement. Analysts said the firm's ability to sign lucrative deals enabled it to weather the quarter with relative success. Its rival TCS posted a 13.8 percent fall in consolidated net profit for the quarter due to a cut in client spending in Western markets. "Infosys is more stable than TCS... despite the impact of Covid-19 and (an) economic slowdown", Baburajan K, editor of industry news website TelecomLead, told AFP. "Securing big client wins helped Infosys stay in a stronger position than its rivals." India's second-largest IT company, Infosys was at the forefront of an outsourcing boom that saw the country become a back office to the world as firms in Western nations subcontracted work -- taking advantage of a skilled English-speaking workforce. Shares of Infosys were up over six percent in Mumbai ahead of the earnings announcement.