Infosys,Indian Software Giant, Reports Increase In Net Profit, Growth In North American Market

Indian software giant Infosys (NYSE: INFY), the country’s second-largest software services exporter, reported a jump in profits as well as in revenues in the June quarter, the company announced Friday.

The Bangalore-based company reported a net profit of $480.2 million in the first quarter of 2014, a 21.6 percent growth over last year and a 13.3 percent growth in consolidated revenues, which currently stand at $2.13 billion, compared to the same period last year. Infosys, which earns more than 80 percent of its revenues from North America and Europe, has been recovering from the impact of the global slowdown, while coping with the departure of several senior executives, including some of the company's co-founders.

S. D. Shibulal, CEO and managing director, said that the company enjoyed the “confidence of clients” as it added 61 clients in the April-June period, compared to 50 new clients in the previous quarter.

The North American market -- Infosys' largest -- witnessed a sequential growth of 3.7 percent as it continued to be the primary source of revenue for the company with a 60.8 percent share. The European market, however, which accounted for 24.5 percent of the company’s revenues in the first quarter, saw a 1.1 percent sequential decline. The Indian market also reported a 6.9 percent decline, according to a company release.

Compared to the previous quarter, the company posted a 3.5 percent drop in net profit and a 0.8 percent fall in revenues. However, Infosys maintained its growth forecast of 7 percent to 9 percent for the year, adding that it expected to grow at 5.6 percent to 7.6 percent in rupee terms.

Infosys, which for the first time in its 33-year history has brought in an executive from outside its own ranks to lead the company, has been reeling under a mass exodus of employees in the last few months. Since the company's celebrated co-founder, N.R. Narayana Murthy, returned as executive chairman to steer the company back to being the country's technology bellwether, nearly a dozen senior executives, some of whom were in the running for the CEO's position, have quit.

Companywide, the employee attrition rate touched a record high of 19.5 percent, against 18.7 percent in the January-March period, as 10,627 employees left the company in the first quarter.

U.B. Pravin Rao, the chief operating officer, acknowledged that the attrition rate was “worrisome” and said that the company, which employs more than 160,000 employees, is “implementing various initiatives to retain good talent.”

This is Infosys’ first quarterly report to come out following the announcement of Vishal Sikka, former chief technology officer at SAP AG (XETRA: SAP), as the CEO and managing director, in June. He is expected to take over the company's leadership from Shibulal in August.