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India’s software giant Infosys’ third quarter profits were up 14.2% year-on-year, to Rs. 17.8 billion (about $393 million) according to CNBC TV-18. The company had expected profits of Rs. 18.21 billion. The lukewarm earnings along with unenthusiastic forecasts for the next fiscal year caused a drop in share prices. The shares dropped 4.1% on the BSE Sensex which took an overall hit of 351 points, according to the Times of India.The company’s management blamed seasonality and weak economic recovery in global markets for lower profits. Infosys managed to gain 40 new clients and created 11,067 new jobs in the the third quarter but its revenue from the U.S. dropped 1.1%, it also got 22% of its revenue from Europe. The management said they were sheltered from the worst of Europe because their exposure to Greece, Ireland and Portugal is limited.
The company’s delayed compensation report saw them deal with high attrition and fend off poaching earlier this year. The other big concerns for the company relate to higher tax rates and appreciation of the rupee. CFO, V. Balkrishnan told CNBC TV-18:
“The rupee will be volatile but the chances of it depreciating are higher than appreciating. We continue to hedge for the next two quarters.”
The company’s management projected an 18-20% growth in the IT industry and expects its offshore earnings to be on the rise. They told CNBC TV-18 that they were optimistic about North America but concerned about Europe.
Infosys expects to hire 40,000 new employees and projects steady growth in FY2011. The company has brought on another director to the company to help the company regain investor faith, to stave off investor’s jumping to competitors Wipro and Tata Consultancy Services. Wipro and TCS will release their earnings report next week.