Infosys said Covid-19 led slowdown has resulted in termination of projects and may hit the company’s profitability going forward.
The Bengaluru-headquartered IT services exporter has highlighted the pandemic could be a major risk going forward as key clients across the US, Europe and other prominent markets may cut costs due to prolonged economic impact.
The economic slowdown or other factors affecting the economic health of the U.S., the U.K., the EU and Australia are expected to cast a gloom on the financials of the Indian IT services giant.
Infosys, on account of its revenues being concentrated in a few geographies, expects to see a serious impact. “In fiscal 2020, 61.5%, 24.1% and 11.8% of our revenues were derived from projects in North America, Europe and the rest of the world, respectively,” the report said.
In fiscal 2020, it derived 31.5% of its revenues from the financial services and insurance industry. “Instability and uneven growth in the global economy has had an adverse impact on the growth of the IT industry in the past and may continue to impact it in the future.
This instability also impacts our business and results of operations and may continue to do so in the future,” the report added. If the economies of the U.S., U.K. or the EU weaken or growth remains uneven — including as a result of the uncertainty surrounding Brexit — Infosys believes its clients may reduce or postpone their technology spending significantly. This may, in turn, lower the demand for its services, negatively impacting its revenues and profitability.