The Hindu Business Line : It's growth quarter for software firms

THE April-June quarter of the current fiscal has been a period of strong growth for India's top-rung and medium-sized software firms as they thrived on the swelling demand for offshore technology development.

A look at the April-June period, which is the first quarter of the fiscal for most of the companies, reveals that companies such as Infosys Technologies, Wipro, Satyam Computer as well as Hughes Software Systems and Polaris continued to perform stronger in the IT outsourcing market.

These companies improved their financials on year-on-year as well as on sequential basis during this period. Even smaller companies such as Sonata Software have also done well during the period.

Infosys Technologies' net profit was up 16 per cent and revenues 12.44 per cent on a sequential basis over the previous quarter, even beating its own forecasts. On year on year basis, net and revenues were up by nearly 40 per cent during the period.

Wipro too happily witnessed its predictions for the quarter going of the mark on the higher side as its net profit jumped 11.3 per cent sequentially and 73 per cent on annual basis. Satyam Computer Services notched up a growth of 23 per cent sequentially and 43 per cent annually for its net profit, better than it had expected.

Healthy addition of clients during the quarter was a reason for better than expected growth for these firms. Infosys added 29 new clients during the period, while Wipro bagged 35 new customers. Satyam had 25 new accounts.

Medium sized firms such as iFlex, Polaris and Hughes Software also grew during the period. These companies posted year-on-year growth of 9.2 per cent, 24 per cent and 63 per cent respectively for their bottomline.

Many relatively smaller firms too continued to record increased revenues and profits in the quarter as against their performance in the same period last year. Examples are Tata Elxsi, Subex Systems and Sonata Software. However, some companies saw a dip in their profits in the quarter on a sequential basis, albeit marginally.

One of the major reasons that contributed to the profits of software firms has been the depreciation of rupee against the dollar during the quarter under review. The rupee shed 5.6 per cent against the dollar, which helped software firms immensely since they charge their clients in dollar and pay for their expenses such as salaries in the rupee.