India's second largest outsourcer, Infosys Technologies, experienced a revenue decline in the quarter to 30 June, while its net profit grew marginally.
The company warned that the global economic environment will continue to be challenging.
Infosys also forecast that revenue for its fiscal year to 31 March 2010 is expected to be in the range of $4.45 billion and $4.52 billion, representing a decline of between 3.1 to 4.6 percent over revenue in the previous year. Infosys first forecast in April the company's first ever annual revenue drop.
The outsourcing market continued to be difficult in the quarter to 30 June, mainly because customers have delayed decisions on new contracts, said Siddharth Pai, a partner at outsourcing consultancy firm, Technology Partners International (TPI), on Friday. Customers are still very interested in outsourcing, he added.
In the quarter, Infosys reported revenue of $1.12 billion, down by 2.9 percent from revenue in the same quarter last year. Net profit rose 1.6 percent.
Revenue growth was higher calculated in Indian rupees for the quarter at 12.7 percent, while net profit increased 17.3 percent.
The company reduced staff by 945 in the quarter, ending with a total of 103,905 workers as of June 30.
Revenue for the quarter ended September 30 is expected to be in the range of $1.11 billion and $1.13 billion, after a year-on-year decline of between 7.1 and 8.7 percent.
Infosys is the first among large Indian outsourcers to announce financial results for the quarter.
Although the outsourcing market is expected to recover, the offshore component of it may not return to the high growth rates seen before the recession, Pai said. Most of the potential customers have already taken a decision on offshore outsourcing, and what will be seen is largely additional business from the same customer base, he added.
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