NEW DELHI: A slew of earning reports of software development and services companies for the second quarter ended September 30 will be announced over the next couple of weeks. The earnings season will be kicked off Thursday by technology giant Infosys Technologies. It would be followed by a number of other heavyweights including Wipro Ltd. and Satyam Computer Services announcing their financial numbers. "I think investors can look forward to some pleasant surprises in the results. The general feeling is that the companies would be able to meet the expectations," said Neeraj Deewan, an analyst with brokerage firm Quantum Securities. "No one is really expecting any fireworks but if the top companies are able to maintain a reasonably good growth rate despite the prevailing global market scenario, it would more than cheer the investors," Deewan told IANS. Industry observers say the earning growth of the software makers in the July-September quarter would be led by strong volume growth and tapering billing rate declines that had crimped the profit and sales growth. Infosys Technologies, India's largest listed software exporter, had earlier projected a cautious business outlook for the future despite posting a robust revenue growth for the quarter ended June 30, badly affecting market mood. The Nasdaq-listed Infosys said the outlook continue to remain cautious due to "delays in client and prospect visits arising from adverse travel advisories and a challenging global business environment". Infosys' revenue grew by 24.83 percent to 7.65 billion during the April-June quarter on addition of new clients. The company acquired 23 new clients in the quarter. "The billing rate pressure, which most of the companies were facing after the September 11 terror attacks, has more or less stabilised in the last few months," said a tech industry analyst with credit rating firm ICRA India Ltd. "A growth in business volume coupled with stable billing rates will be the theme of the quarterly results of software companies. There has been an overall buoyancy in the business in the second quarter." Profit growth of Indian software makers slipped in the past five quarters as overseas clients like British Airways and GE pared orders and new customers demanded sharply lower prices. Analysts say revival in hiring spree by tech firms in the last couple of months and increased visits after the withdrawal of the travel restrictions imposed by some Western countries also indicate a general pick-up in outsourcing demands. The U.S. in June advised Americans planning to travel to India to defer their plans due to fears of a possible war between nuclear-capable rivals India and Pakistan. Other countries such as Britain, Australia and New Zealand issued similar travel warnings to their citizens. India's high-profile IT industry was badly hit by the travel restrictions as it resulted in delays in business finalisation process, and in some cases outsourcing orders were also cancelled. The prevailing downturn in the global economy and a revival in IT spending by Indian industry are also likely to contribute to revenue growth, as companies look to reduce cost by outsourcing key activities. "One expects large scale IT deployment to continue in the banking and financial services sector and also by the government," said Ravindra Datar, senior analyst (IT Services) with Gartner India. "Other verticals will follow too as competitive pressures force Indian companies to offer more and better products and services while simultaneously improving operating efficiencies." Industry observers say the investors would also focus on the heavyweight companies' thought on business conditions in the October-December quarter and the full fiscal year to March 31, 2003. "The business guidance for the months ahead would be very crucial. It would give an idea whether the tech industry in India has finally set out on a recovery path," said Deewan of Quantum Securities.
Source: IANS