Infosys Technologies, India's second largest outsourcer, reported a decline in revenue and profit in U.S. dollar terms for the quarter ended September 30, as clients continued to hold back IT spending, and negotiated lower prices.
The company has also forecast declining revenue for the quarter ahead, and for the fiscal year ending March 31.
Infosys said on Friday that its revenue was US$ 1.15 billion for the quarter ended September 30, down by 5.1 percent over revenue in the same quarter last year. Profits were also down by 0.9 percent to $317 million.
The results were however better than was forecast by the company in July.
Revenue is forecast to be in the range of $1.15 billion and $1.16 billion for the quarter ending December 31, which is a year-on-year decline of between 0.5 to 1.4 percent.
Revenue for the fiscal year is expected to be in the range of $4.6 billion and $4.62 billion, down by 1.0 to 1.3 percent from a year ago. The decline is smaller than the 3.1 to 4.6 percent decline the company forecast in July.
The company's results for the quarter are in accordance with International Financial Reporting Standards (IFRS).
The effects of the recession on outsourcing still lingered in the third quarter, said Siddharth Pai, a partner at outsourcing consultancy firm Technology Partners International (TPI). Besides, the third quarter has traditionally been the weakest quarter in the year for outsourcing deals, he added.
Infosys did a little better in the quarter in Indian Rupees, partly because of currency fluctuations. Revenue grew by 3.1 percent in the quarter from a year ago, while profit grew 7.5 percent.
The company added 35 clients and 1,548 new staff in the quarter. Staff addition was down dramatically from 5,927 additions a year ago.
The company had 105,453 employees as on September 30, 2009.
The National Association of Software and Service Companies (Nasscom), a trade body of Indian outsourcers, said in July that India's revenue from outsourcing services to clients abroad will grow by about 4 to 7 percent in the Indian fiscal year to March 31, 2010.
In the fiscal year to March 31, 2009, the revenue grew by 16.3 percent to $46.3 billion, according to Nasscom estimates.
An improvement in business is expected in the fourth quarter, Pai said. There will be a lot of pent-up demand for Indian outsourcers in the next two quarters, but growth in revenue will not reach the about 30 percent Indian outsourcers had before the recession, he said. Companies that were considering outsourcing to India have already done so, and new business will be incremental, he added.