It was not just a thing or two that went wrong for Infosys in the latest March quarter. Instead, the results showed slippage on several of its keenly followed performance parameters.

The company's results showed a reduction in volumes (person-months billed), weaker pricing, lower employee utilisation and to top it off, lower revenues from the key US geography as well as the Banking and Financial Services (BFSI) vertical.

The challenges flagged by these numbers were compounded by its tepid revenue guidance. Infosys now expects to grow at a lower rate than the industry's growth of 11-13 per cent projected by Nasscom for software and services companies in FY13.

During the quarter, its revenues fell 4.8 per cent sequentially to Rs 8,852 crore, while net profit declined 2.4 per cent to Rs 2,316 crore. The fall in net profit would have been steeper, but for other income to the tune of Rs 652 crore. This came mainly from its large cash balances parked in deposits.

The only positives to emerge from the quarter were that revenues from Europe held steady, while the manufacturing vertical grew marginally. Attrition rate fell significantly to 14.7 per cent, and is among the best in the industry.

Volumes, prices edge down

Infosys experienced a 1.5 per cent decline in volumes, while realisations dipped by 1.1 per cent. After many quarters, pricing has come under pressure, although the company hopes that it will be maintained at current levels going forward.

The lower volumes are also reflected by the fact that utilisation has fallen by as much as 4.4 percentage points to 73 per cent. This hints at client ramp- downs in some projects and also possibly a slower pace of newer contracts getting finalised.

Key verticals slow

Revenues from the US fell 4 per cent sequentially, while the BFSI vertical witnessed a steeper 4.6 per cent decline. The company attributes these to sluggish takeoff in insurance projects and a still challenging financial services environment.

After leading the growth for several quarters, revenues from the retail and life sciences segment actually fell 2.9 per cent sequentially.

Of concern is the fact that the company has had no new client addition in the $70-100 million category, during the quarter. Discretionary spending by its clients seems to be slowing down significantly.

Lackadaisical guidance

For the new fiscal, the company has guided for just 8-10 per cent growth in revenues in dollar terms, which is lower than Nasscom's forecast for the IT industry. This is disappointing after Infosys' larger global peer Accenture has increased full-year revenue growth guidance to 10-12 per cent from 7-10 per cent earlier after a robust February quarter.

Infosys was at least expected to match this rate, if not better it.

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