Analysts have been critical of the Infosys third quarter results, but they have only themselves to blame for it. Over the past few weeks, they have been building up sky-rocketing expectations. Truth be told, Infosys has done reasonably well by bettering its own guidance. It looks like the Street was expecting too much and this is no indicator of how the needle is ticking over in the global outsourcing world. Even Infosys chairman NR Narayana Murthy looked a little peeved by analyst comments, while talking to FE on Thursday. He said he was quite happy that the company was able to post a net profit rise of 14%, though economic recovery in developed markets was taking longer than expected. He was clear that Infosys did well to better its outlook and indicated that the firm need not worry about what others expect all the time. It is possible that analysts, over the years, have started to expect miracles from Infosys. Aided by better pricing and cross currency gains, Infosys was able to register a revenue growth of 6% in dollar terms. Though the rupee appreciated by around 3.5%, Infosys was still able to maintain margins. But clearly analysts have reasons to be disappointed with the company?s Q4 outlook. The revenue growth guidance of 1-2% is not very encouraging. Granted Infosys is a safe player when it comes to providing guidance but such a pessimistic outlook was not expected. Infosys has attributed this outlook to the macroeconomic environment, which, according to management commentary, still has to be viewed with cautious optimism. The company?s top brass was of the opinion that there was a lot of uncertainty with regard to customer sentiments. The focus is on short-term projects, and IT budgets for the coming year are likely to be either flat or marginally up.
Meanwhile, both TCS?India?s largest software exporter?and Wipro Technologies?Infosys?s cross-town rival?are slated to announce their earnings in the coming week. Analysts expect both these companies to turn in better numbers than Infosys. They seem to be particularly bullish about TCS. Trade pundits point to the fact that the company?s attrition rate has shrunk considerably to around 12.5%. Hence, it have been able to keep the utilisation rates high, and analysts expect a 7-8% revenue growth from TCS. With regard to Wipro, analysts are counting on the fact that the Azim Premji-led company has started to vie for smaller contracts, which will reflect in its books this time around.