Infosys has probably lost a bit of its sheen in the past few quarters but it?s far too early to jump to any conclusions. A lot of the judgment has been done based on the performance of TCS. Surely TCS has been outperforming Infosys consistently, but a closer examination of Infosys? results reveal that it has not been doing too badly either. Some of the analysts focused a bit too much on sequential growth. Infosys? net profit tanked 5% sequentially, but that was probably an unfair way to look at it. Wage hikes had considerably eroded Infosys? margins and its Q1 performance took a hit. Its year on year revenue growth?the true barometer for growth?showed a jump of 15.6% which is not sluggish by any means.
Granted that it sounded cautious about the macro-economic environment and did not revise upwards its revenue guidance in dollar terms. But then Infosys has always been conservative about its outlook, and always preferred a ?safety first, glory if possible? policy. But many of the critics have been too harsh on the company.
Like its CEO Kris Gopalakrishnan said it is not the company?s priority to meet analysts? expectations. Infosys beat its guidance by 1.8% and that?s good enough. It missed the Street?s expectations narrowly, but a company of Infosys? size need not be worried about these things beyond a point.
But there are two disturbing numbers. Infosys added only 26 clients in the first quarter. That was the lowest addition in four years. That may need some explanation from the company. Also operating margins in Q1 shrunk to about 26%, at least three percentage points down from the previous financial year?s 29.5%. This allowed TCS to catch up with Infosys on the operating margins front. Some food for thought for Kris & Co, but the investors can safely keep that panic button away.
Exuding confidence
TATA Consultancy Services is oozing confidence. While many of the other software firms look uneasy and uncertain, TCS has taken a very positive stance?its management commentary soon after declaring its earnings on Thursday was proof of this. The TCS leadership is not seeing any reason for slowdown in business momentum, even as market analysts are spreading negative sentiments based on their analysis of the macro-economic uncertainty in Europe and North America to some extent.
Four of India?s largest software exporter?s top 10 deals came from North America and then one each from Europe and UK. TCS does not see unemployment issues in the US and the sovereign debt crisis in UK to be impacting it. Sure, TCS is on the top of its game and that has been the case for the past few quarters. View from the top is always different, and TCS is clearly enjoying that view.
The first quarter results back up that confidence. Its 31.4% growth in revenues in Q1 is clearly superior to the 21% growth of rival Infosys. TCS? top customers like General Electric and Citigroup are squeezing costs, and the resultant outsourcing of projects have boosted the company?s fortunes considerably.
Investors have been a little concerned about the sector?s immediate future after Infosys sounded caution and refused to revise its guidance in dollar terms. But the confidence provided by TCS may offer solace.
Kumars & Singhs are Linkedln kings
LinkedIn, the world?s biggest professional network, has now more than 10 million professionals connected in India. That?s fast pace, considering that it had started its India operations only in 2009. Globally it has more than 100 million users.
Here are some interesting statistics about LinkedIn members in India:
The top 10 surnames on LinkedIn are Kumar, Singh, Sharma, Gupta, Jain, Shah, Patel, Mishra, Reddy and Yadav.
The top 10 industries on LinkedIn are information technology and services, computer software, telecommunications, financial services, education management, banking, automotive, pharmaceuticals, electronics and accounting.
As many as 19,027 people in India listed ?bollywood?, ?hollywood? or ?film? in their LinkedIn profile.
Only 4% of members in India put the word ?owner? in their title.