Infosys CEO still hopeful of meeting guidance

Software major Infosys, which has raised concerns about meeting its full-year guidance is hopeful that it can address challenges if business momentum picks up and deal closures happen in the next four months. "We have some new challenges that emerged after October and some of them will impact guidance but we still have 4 months to go. And if business velocity picks up, close large deals, it will address some of the challenges," Infosys CEO SD Shibulal said. 

Over the last few weeks, Infosys managementhad indicated to analysts that the company may miss its organic growth guidance of 5% for the current year because of delays in decision-making, ramp-downs in certain projects and also the impact of Hurricane Sandy, particularly in the manufacturing space. 

Explaining some of these challenges Shibulal said: "We had a pretty strong Q2, had good wins and good momentum. As the quarter (Q3) progressed, we have seen a number of challenges. Those challenges include furloughs, large deal closure delays." On whether this meant that the company would have to revise its annual guidance downwards, he said that they still have four more months to go and if business momentum picks up it will address some of the challenges. 

The company gave out an initial guidance of 8-10% for FY 13, revised this downwards to 5% after their first quarter results, as it struggled to generate demand in a volatile environment. It also suspended giving quarterly guidance after the first quarter. The 5% guidance is way lower than the Nasscomestimate for the industry, which is currently the lower end of 11-14 %. The guidance also doesn't include the revenues from Lodestone, the Swiss consulting firm that it recently acquired. 

Talking about the overall macro-environment , he said: "If you look at the environment, it's still very challenging. US is still going through uncertainty, there is overhang of fiscal cliff. So, the environment is still challenging and some of issues are yet to be resolved . Expect majority of next-year's budgets to close by end of Feb. 

We will have much better view on these matters in April." Infosys' struggle also comes at a time when rivals such as TCS and Cognizant Technologies have grown at a fast pace, prompting question on whether its pain is more company-specific rather than an industry issue.