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From the News Desk
Tuesday, 11. April 2006
Indian Tech Firms Q4 Net Seen Strong on Outsourcing
Indian software services companies, thriving on an outsourcing boom, are set to report quarterly profits rose by at least a third even as a slightly stronger rupee and rising wages crimped profit margins. With more companies in the United States and Europe under pressure to cut costs to stay competitive, Indian software services firms are expected to grab a growing share of the outsourcing deals in the months ahead, analysts said.
This would likely boost revenues, but profits may grow at a slower rate as software services firms face rising wage costs in the fast-growing economy, analysts said.
Diviya Nagarajan, an analyst at Motilal Oswal Securities, said an estimated USD 19 billion of outsourcing deals are expected in the next 18 months, including from Citigroup. "We expect large order inflows to increase as offshoring continues to be accorded greater importance," she said. "More and more such deals will be reported in the next few quarters."
A surge in hiring to meet rising demand coupled with moves by large players to acquire small to medium firms will also be the main trends in the coming quarters, analysts said.
Infosys Technologies Ltd., India's second-largest software services exporter by earnings, is expected to report on Friday net profit for its fiscal fourth-quarter ended March rose to 6.89 billion rupees (USD 154 million), up 34.2 percent from the same period last year, a Reuters poll showed.
Mid-sized MphasiS BFL Ltd., which kicks off the earnings parade on Tuesday, is projected to post a 48.5 percent rise in net profit to 461 million rupees. Last week, MphasiS welcomed a USD 380 million bid by U.S. Electronic Data Systems Corp. for a majority stake in the Bangalore-based Indian company.
[More Info on Reuters]
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This would likely boost revenues, but profits may grow at a slower rate as software services firms face rising wage costs in the fast-growing economy, analysts said.
Diviya Nagarajan, an analyst at Motilal Oswal Securities, said an estimated USD 19 billion of outsourcing deals are expected in the next 18 months, including from Citigroup. "We expect large order inflows to increase as offshoring continues to be accorded greater importance," she said. "More and more such deals will be reported in the next few quarters."
A surge in hiring to meet rising demand coupled with moves by large players to acquire small to medium firms will also be the main trends in the coming quarters, analysts said.
Infosys Technologies Ltd., India's second-largest software services exporter by earnings, is expected to report on Friday net profit for its fiscal fourth-quarter ended March rose to 6.89 billion rupees (USD 154 million), up 34.2 percent from the same period last year, a Reuters poll showed.
Mid-sized MphasiS BFL Ltd., which kicks off the earnings parade on Tuesday, is projected to post a 48.5 percent rise in net profit to 461 million rupees. Last week, MphasiS welcomed a USD 380 million bid by U.S. Electronic Data Systems Corp. for a majority stake in the Bangalore-based Indian company.
[More Info on Reuters]
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