India’s second largest software exporter Infosys is concerned over changes in regulatory environment, long-term outsourcing contracts and a spate of top management exits affecting its business.
Additionally, in a regulatory filing to the SEC, Infosys said it continues to face pricing and wage pressures and currency volatility, which are hurting its growth. At the end of the 2013 fiscal, Infosys had forecast growth in the range of 6-10 per cent for the 2014 fiscal, to which the market gave a thumbs-down.
Infosys said its outsourcing clients are expressing concerns over a perceived association between offshore outsourcing and the loss of jobs.
The US is in the midst of a debate on immigration reform aimed at eliminating fraud and abuse of the H1-B visa programme, the provisions of which would make it tougher for companies to get visas.
Offshore Outsourcing
With the growth of offshore outsourcing receiving greater political and media attention, particularly given the prevailing economic environment, it is possible that there could be a change in existing laws, new legislation restricting offshore outsourcing or imposing restrictions on deployment of and regulating wages of visa holders at client locations, which may adversely impact our ability to do business, especially with governmental entities, the filing said.
It has cited the example of Ohio, whose Governor has issued an executive order prohibiting any cabinet agency, board or commission of the State from expending public funds on services that are provided offshore.
Recently, Wipro Chairman Azim Premji said that the proposed US immigration Bill needs to be reviewed and aspects related to visa procedures simplified and speeded up, alluding to higher visa rejection rates in recent times. Infosys said private sector companies working with these governmental entities may be restricted from outsourcing projects related to government contracts or may face disincentives if they outsource certain operations, a move that could impact its business.
The company is concerned over a spate of top management exits and said that its future performance would be affected by any such disruption.
venkatesh.ganesh@thehindu.co.in