There is no heartening news yet. Although Infosys beat street expectations for the quarter ending June, India’s second largest software services exporter is clearly not out of the woods; nor is the IT industry. The economic green shoots that emerged early in the quarter have quickly disappeared. And conflicting data is not helping things. In the US, the IT industry’s main revenue geography, unemployment is up and retail sales are down. However, housing starts are beginning to grow.
The contradictory data is impacting customer behaviour. Deals are now scrutinised much more than they were last year, leading to project delys. Infosys’ business volumes dipped 1.1 per cent during the quarter. Suddenly, the industry’s punch line – when enterprises want to reduce costs, outsourcing will be the darling – no longer appears to be working. Of course, the customers are more price sensitive. Infosys expects prices for the year ending March 2010 to dip by 5 per cent. The company’s full year guidance is a great summary of the volatile environment : In dollars, it expects revenues to decline between 4.6 and 3.1 per cent if FY2010. Last quarter, for the first time in the history of the company, it had indicated that revenues could decline for the full year.