Infosys said that its second quarter revenues will be better than the first but continued to maintain a cautionary stance, citing pullback in tech spending as a result of Brexit.

Addressing an analyst meet in Pune, CEO Vishal Sikka outlined concerns in some sectors and certain geographies. Recently, Royal Bank of Scotland shelved an IT deal with India’s second largest exporter.

Sikka said that Infosys did not see the RBS ramp down coming at the start of the quarter.

“We are seeing softness in some clients, post Brexit, now which was not anticipated at the start of Q2. We want to see if the RBS is a one-off case or there are more like RBS,” said Sikka. The markets did not react to this and the scrip was down 1.52 per cent and closed at ₹1,020 on the BSE.

After four successive quarters of market beating performance, Infosys off-late has started seeing some road-bumps. Its first quarter performance was disappointing as it missed expectations and even cut revenue guidance to 10.5-12 per cent, which is similar to the Nasscom guidance of 10-12 per cent guidance for the year but lower than Infosys’ original guidance of 11.5-13.5 per cent. The management had attributed the softness in number to challenges in the consulting and core banking product Finacle.

Sikka, however, pointed out several bright spots in some of the initiatives taken recently. He alluded to the mainframe modernisation initiative, which has managed to generate a pipeline of several hundred million dollars. Mainframes are old computer systems which is at the heart of banking technologies of companies such as Goldman Sachs and others.

As a part of its new technology initiative, Infosys had launched Mana, an Artificial Intelligence (AI) system similar to IBM’s Watson, four months ago. “Since it was launched four months back, Mana has been deployed by 4 clients. While Sikka did not share the margins accrued from Mana, he said that it is helping the company in renewing its existing deals as well as new projects.

Finacle, its banking solution, which was one of the reasons for the company’s lacklustre performance has now got Sanat Rao to head operations.

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