Infosys, HCL Tech Trim Revenue Outlook as Global Economy Falters

IT heavyweights Infosys and HCL Technologies on Thursday tweaked their full-year revenue outlook as macroeconomic challenges continue to weigh on global discretionary spends. Infosys Ltd posted a 3.1 per cent rise in its second-quarter net profit in line with the market expectations but cut its annual sales forecast in a clear sign of continuing curtailment in IT projects amid macro uncertainties.

Infosys Cuts Growth Outlook

The Bengaluru-headquartered Infosys cut its FY24 growth outlook by 100 basis points to 1-2.5 per cent against 1-3.5 per cent guided earlier. Infosys cautioned that discretionary projects and large transformation programmes have reduced significantly and indicated that it could give campus recruitment a miss this year though it is monitoring the situation every quarter.Telecom, hi-tech, financial services payments, investment banking, and retail are among sectors that are seeing weak demand, Infosys CEO Salil Parekh at a briefing said, adding that manufacturing and life science space continue to do well.

HCL Tech Lowers Guidance

Smaller rival HCLTech has reduced revenue growth guidance for the full year in the range of 5-6 per cent from 6-8 per cent projected at the end of June 2023 quarter due to its below-expectation performance during the first half of the current fiscal. HCLTech CEO and Managing Director C Vijayakumar said the growth during the first half has been much lesser than expected, and the company will need to post strong growth on a sequential-quarter basis, both in the third and fourth quarter, to match the growth guidance for the full year. The discretionary spend is still very soft. We have not seen the discretionary spend pick up like we anticipated, Vijayakumar said.The Noida-headquartered IT services company plans to hire 10,000 freshers in the current fiscal year compared to around 27,000 freshers it recruited in 2022-23.

TCS Q2 Scorecard

The tech earnings season began on a sombre note on Wednesday, with Tata Consultancy Services TCS reporting a weak Q2 scorecard. The countrys largest software exporter reported an 8.7 per cent increase in September quarter net profit to Rs 11,342 crore, missing street estimates. In its management commentary - a key monitorable for the market - TCS made it clear that the headwinds for the IT sector continue amid a sluggish economic climate. TCS revenue increased 7.9 per cent in the September quarter to Rs 59,692 crore but was up only marginally compared to Rs 59,381 crore in the preceding June quarter.As it is, ahead of the Q2 results, analysts tracking the sector had anticipated that a large Indian IT services pack will report a muted sequential show in a traditionally strong second quarter as macroeconomic challenges continue to weigh on global discretionary spending.

The IT industry is facing a number of challenges, including the ongoing macroeconomic slowdown, the war in Ukraine, and the rising cost of living. These challenges are likely to continue to weigh on the industry in the coming quarters. However, there are also some positive signs, such as the continued growth of cloud computing and the increasing demand for digital services. Overall, the outlook for the IT industry is mixed. While there are some challenges, there are also some opportunities. IT companies that are able to adapt to the changing environment and capitalize on the opportunities will be well-positioned for success.