IT firms feel the prick despite higher revenues
By siliconindia   |   Friday, 09 July 2010, 22:09 IST   |    3 Comments
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IT firms feel the prick despite higher revenues
Bangalore: Software exporters have begun reporting financial results for the June quarter and the increasing U.S. sales are likely to boost their revenues. The profit might reel under pressure due to higher wages and lower returns from Europe, reports K. Raghu and Lison Joseph of the Mint. Recovering from the global economic downturn, The Indian IT firms are now receiving more orders from the U.S. compared with a year ago. The European debt crisis, which has caused the euro to slide against the dollar, has also hurt earnings. The revenue of Infosys Technologies will grow 5.7 percent in the June quarter from the preceding three months to 6,253 crore and the net profit is likely to be flat at 1,570 crore. A poll by ten brokerages covered Citigroup, UBS AG, Sharekhan, Edelweiss Securities, India Infoline, Kotak Securities, Ambit Capital, Jaypee Capital Services, Motilal Oswal Securities and Angel Broking. TCS, is expected to see a quarter-on-quarter revenue growth of 7.1 percent to 8,284 crore, but a decline of 4.1 percent in profit to 1,852 crore. Wipro is likely to report a 0.92 percent decline in profit to 1,210 crore. Gartner lowered its expectations of worldwide IT spending growth in the June quarter, saying it would grow 3.9 percent to $3.35 trillion. In April, it had forecasted a 5.3 percent growth. “The European sovereign debt crisis is having an impact on the outlook for IT spending. The U.S. dollar has strengthened against the euro during the second quarter of 2010, and this trend will likely continue in the second half of 2010, which will put downward pressure on U.S. dollar-denominated IT spending growth,” said Richard Gordon, Research said Richard Gordon, Research Vice-President at Gartner. Diviya Nagarajan, analyst at UBS Securities India expects most large software firms to report rupee revenue to grow 2 to 6.7 percent in the June quarter over the preceding quarter, due to a higher volume growth of 4 to 6.5 percent.

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