Infosys net profit up 16 percent in first quarter

Infosys, India's No. 2 software services exporter, just missed expectations with a 15.4 percent rise in fiscal first-quarter profit as a surge in wages offset strong demand from western clients.

Infosys, founded in 1981 by seven engineers with $250 borrowed from their spouses, maintained its dollar revenue growth forecast at 18-20 percent for the fiscal year ending March 2012. Its shares fell 4.5 percent in a weak Mumbai market.

Analysts expected full-year revenue growth of 20 percent for Infosys, according to Thomson Reuters I/B/E/S.

Bangalore-based Infosys, also listed on the Nasdaq, said consolidated net profit rose to 17.22 billion rupees ($ 387 million), from 14.88 billion rupees a year earlier.

Revenue rose about 21 percent to 74.85 billion rupees, as the firm added 26 clients in the June quarter.

A Reuters poll of brokerages had forecast a profit of 17.29 billion rupees on revenue of 75.2 billion rupees for the company, which counts Goldman Sachs, BT Group and BP among its main clients.

India's $60 billion showpiece IT sector is enjoying solid growth from improved pricing for its services and increased outsourcing by companies looking to cut costs and boost efficiency amid growing economic uncertainty.

According to research firm Gartner, the global IT market will expand 7.1 percent this year, up from its previous projection of 5.6 percent growth, which bodes well for top Indian exporters like Infosys.

But Infosys is facing fierce competition from its global and local rivals, including IBM, Accenture, Tata Consultancy Services and Cognizant Technology.

The company is also going through a management reshuffle.

In April, Infosys announced the retirement of billionaire Chairman N.R. Narayana Murthy, who would step down in August, and said Chief Executive S. Gopalakrishnan would become co-chairman.

K.V. Kamath, an independent director of Infosys and the non-excutive chairman of India's second-largest lender ICICI Bank, will take over as non-executive chairman of Infosys, the company said.

The board also said S.D. Shibulal, a founder of the company and currently its chief operating officer, would become the new chief executive.

Shares in Infosys, valued at more than $38 billion, have fallen 15.2 percent this year, compared with an 11.7 percent drop in the sector index and a 8.5 percent fall in the Mumbai index.