BANGALORE, INDIA: In view of the impending economic recession in the US and anticipating reduced consumer spend on IT, Infosys expects slow growth rate in the first quarter and in the fiscal year 2008-`09.
The company has set its guidance for FY09- revenue growth by about 20 per cent to Rs 20,000 crore –after gauging feedback from its clientele.
"We find the market environment challenging. In the short-term, we expect slower growth but see growth opportunities in the medium to long term with our global delivery model," said S Gopalakrishnan, CEO and MD, Infosys Technologies.
Elaborating on the fallout of the US slowdown on Infy's business, Gopalakrishnan said that in a survey of the company's top 100 clients, 70 per cent of clients expected their budgets to be flatter or lower than last year's spend.
Around 19 per cent projected a "major decrease" in IT budgets. "We are also seeing changes such as longer decision making cycles, restructuring and leadership changes among customers and also delay in projects," he said.
However, the company is banking on the fact that in this sluggish market environment, customers would try to cut their operating costs by offshoring to low cost destinations like India. In addition, the company is also diversifying its markets, service line offerings and verticals.
The company has started new services such as learning services, SaaS-based services and platform-based offerings. The good news for the company this quarter was the rupee's decline against the dollar.
In fiscal 07, which saw a 11 per cent appreciation of the rupee, the company suffered losses to its topline to the extent of Rs 2000 crore while the bottomline got hit by as much as Rs 1000 crore.
The company expects the rupee to remain volatile in view of the rising trade deficit, oil prices, decline in foreign inflows and high inflation.