Mumbai: IT major Infosys on Friday said the company would be able to give a clear guidance on its earnings only after the September quarter as it is seeing some ‘softness’ in clients after Britain voted to leave the European Union. In an analyst meet, the top management of the company however said the September quarter performance would be better than the June quarter as the company was able to arrest some of the factors that were a drag on its earnings.
“There are uncertainties across sectors and geographies. We did not see the RBS ramp down coming at the start of the quarter. We are seeing softness in some clients, post Brexit, now, which was not anticipated at the start of Q2. We want to see if the RBS is a one-off case or there are more like RBS,” said Vishal Sikka, chief executive officer, Infosys. Earlier in the month, Infosys lost a major contract from Royal Bank of Scotland (RBS) after the bank announced that it will not pursue its plan to separate and list a new UK standalone bank, Williams & Glyn (W&G), and instead will pursue other options for the divestment of this business.
Infosys has been a W&G programme technology partner for consulting, application delivery and testing services. In July, the company disappointed investors by reporting a lower than expected quarterly performance for June 2016 and also revised downwards its earnings guidance for FY17 amidst slowdown in discretionary spending in its key markets abroad. Mr Sikka also reassured employees that the company is not resorting to any lay-offs amidst reports that about 500 people had suffered job losses following the weak quarterly performance and cancellation of the RBS contract.
“Brexit is a sort of headwind for the domestic IT sector. However, it is still early to judge the exact impact of it on IT companies. While the near term risk for the sector persists due to Brexit, the long term story looks promising as the management highlighted several measures it has planned to win more deals in the coming days,” said Harit Shah, research analyst at Reliance Securities, who participated in the analyst meet.
