Infosys Highlights Risks To Profitability Due To Covid 19 Impact

Infosys has highlighted a number of risks that could impact profitability due to the Covid 19 impact. In a press release to the exchanges the company has stated many of its clients' business operations have been negatively impacted due to the economic downturn - resulting in postponement, termination, suspension of some ongoing projects with us and/or reduced demand for our services and solutions.

"Our ability to continue to deliver service delivery obligations while our employees work from home are sometimes constrained by contractual terms with our clients and are therefore dependent on receiving the requisite approvals from them in time. Since few of our clients did not give us the required permissions, or there were delays in obtaining them, our service delivery was marginally disrupted, impacting our revenue and profitability," the company stated in a release.

The company has also been impacted due to restrictions on travel and our ability to assign and deploy people at required locations and times to deliver contracted services, thereby impacting our revenue and/or profitability.

"A small portion of revenue could not be recognized as we did not receive consent from clients for the work completed by our employees remotely on their projects. Our profitability may be marginally impacted as some clients have sought price reductions or discounts. Lower profitability and prolonged payment terms requests from clients can impact our cash flows negatively and may impact our ability to provide dividend to shareholders," the company said in the release

Some of Infosys' clients or suppliers have also invoked Force Majeure clauses in the contracts with them, negatively impacting our business with limited recourse.

"Our business continuity is marginally impacted as key geographies in which we operate imposed a lockdown and/or some of our development centers had to be temporarily shut down due to COVID-19 positive cases found in our campuses or shared campuses. We incurred unanticipated costs in ensuring our offices are safe and hygienic workplaces for our employees; and to enable employees to work from home. We incurred additional costs in procuring and deploying hardware assets and technology infrastructure and data connectivity charges for remote working," the company said.