Recession or not, let's better wait and watch

BANGALORE, INDIA: Albeit being wary and continuing reacting cautiously, Infosys Limited shrugged off apprehensions that the current climate is akin to that of that in 2008-09 — times of the global recession.

"The economic environment then and now are different in a way. In 2008-09, there was sudden fallout and the recovery was also steep. If you look at the current environment, it is definitely uncertain. Now, the critical question is: Will they spend the money? As far as the impact on us, we will definitely benefit (out of the prevailing environment)," said chief executive officer S.D. Shibulal on Thursday.

It has, however, led to reduction in confidence of Infy's clients and in velocity of its business, he added. "We are seeing delay in decision making and larger deals are being scrutinized more."

Since customers haven't yet finalized their information technology budgets for the year, there are indications for flat or reduced spending, Shibulal said, which is reflected in a near-flat forecast for the company's next quarter.

The second-largest software exporter from India forecast dollar revenue growth of 16.4 per cent for the fiscal year to March 31, down from the 17.1-19.1 per cent projected in October.

Chief financial officer V. Balakrishnan didn't sound any different, considering he was just echoing the company's view. "Customers are very cautious, even if they have a budget, they don’t spend. We believe that cautiousness will remain for some time. The European recovery is not in sight."

Lack of political resolve to deal with the euro crisis is also a major reason for the situation, said Shibulal, who expressed confidence that they would continue doing well.

"In a difficult environment, we have done well. We have had very strong client additions; they will spend with us. We have also had large wins this quarter, despite operating in a very uncertain environment," he explained.

Once the client budgets are closed fully for FY11, according to Shibulal, they would look into discretionary spend.

Still, it is the proverbial 'wait-and-watch', as Balakrishnan would second, that the company would adopt in near future.