Infosys suffers as IT budgets are slashed

Although year-on-year overall profit has increased by 10 per cent to US$1.28 billion, India's second largest outsourcing provider has seen a $54m (£36m) drop in profits since September 2008.

Infosys revenues reached $4.66 billion for the year, an increase of 11.7 per cent on the year before, or 15.2 per cent in constant currency terms. But the firm expects revenues to suffer from the economic crisis until 2010, projecting a decline of as much as 6.7 per cent.

Infosys European chief BG Srinivas highlighted significant pricing pressure on customers, particularly in the fourth quarter.

"There has been a real slowdown in decision making," he said. "It is difficult to predict when it will get better, but we believe in around six months."

Srinivas claimed that most of Infosys' clients had cut their IT budgets by five to 10 per cent, adding that Infosys is employing a number of techniques to ensure business growth in an economy showing "no room for optimism".

Infosys employees will have their expenses cut, and there will be no pay increases during the new fiscal year, Srinivas said. This contrasts with the previous 12-month period, when average pay increases ranged from 18 to 20 per cent.