infosys_bnBANGALORE - India’s IT bellwether Infosys Technology is bracing for a flat to lower revenue growth till recovery takes place by mid-2010, a top company official said Friday.

“We hear from clients that recovery will begin from the middle of 2010. Till then our revenue growth over the next 12 months will be flat or lower as projected,” Infosys chief executive S. Gopalakrishnan told IANS.

Admitting that in the short-term conditions remained volatile in terms of currency and business environment, Gopakrishnan said the company was confident of new opportunities and was preparing for them.

“We are operating in a tough environment, which is buffeted by business uncertainty and currency volatility. Though nobody is able to say how long the downturn will last, we want to be prepared for growth opportunities in emerging markets and new verticals,” Gopalakrishnan said.

“There is a downturn, which is unprecedented. Tech analysts and global IT consulting firms like Gartner foresee technology spending coming down by 6-11 percent this year. Clients are reducing spending on IT and want more for less,” he added.

Infosys saw its revenues decline 2.9 percent to Rs.54.72 billion (Rs.5,472 crore) in the first quarter, from Rs.56.35 billion (Rs.5,635 crore) in the fourth quarter last fiscal.

Based on this, Infosys has projected a year-on-year (YoY) decline of 1.9-0.1 percent in the second quarter to Rs.53.18-54.13 billion (Rs.5,318-5,413 crore), as per the Indian accounting standard.

With currency volatility impacting operations, the software major has also forecast that its consolidated revenue for the entire fiscal would decline 1.3 percent YoY to Rs.214.16 billion (Rs.21,416 crore) or grow fractionally by 0.3 percent YoY to Rs.217.47 billion (Rs.21,747 crore).

Its earlier projection had pegged the annual revenue at Rs.220.66-229.28 billion, forecasting a 1.7-5.7 percent YoY growth.

In dollar terms too, consolidated revenue is expected to be in the range of $1.11-1.13 billion) in the second quarter, projecting a decline of 8.7-7.1 percent YoY, as per the International Financial Reporting System (IFRS).

Similarly, for the whole fiscal, consolidated revenue is projected to decline 4.6-3.1 percent YoY to $4.45-4.52 billion, as per the IFRS.

Infosys chief financial officer V. Balakrishnan said volatility across currencies would impact the operating income with appreciation or depreciation of every rupee having effect of 50 basis points.

“During the first quarter, appreciation of rupee against the dollar by 5.6 percent impacted our revenue guidance under the Indian accounting standard but benefited us under IFRS to the tune of $23-24 million,” Balakrishnan noted.

With no sign of stable currency environment, Infosys has decided to take only short-term forward cover for hedging the rupee against the US , with an exposure of $598 million over second and third quarters.