Infosys is making its nearly 1.5 lakh employees work extra hard this quarter by shortening two weekend breaks, a rare step which may mean the company is huffing and puffing to meet its revenue growth target.
Staff at India's second-largest software exporter worked on November 19 and December 10 (both Saturdays), giving the company a revenue boost of 1-1.3% for the October-December quarter, J P Morgan analyst Viju K George wrote in a report.
While all top-tier IT services providers have cited the weak global economic situation in their prognosis, Infosys has been particularly pessimistic in recent weeks. Its chief financial officer, V Balakrishnan, said recently that the company may not reach the upper end of its sales growth forecast of 3-5% for the December quarter and 17.1-19.1% for the financial year, or $7.08-7.2 billion.
Infosys has traditionally been cautious in its forecasts and more often than not it promises less and delivers more. Even so, the downbeat noises emanating from the company as well as the decision to truncate the weekend breaks are causing many to sit up and take notice.
"We believe that this move is unconventional and unusual," George wrote, adding that it has positive implications in the near term but adverse consequences in the medium term. Immediately, working extra days will give revenues a leg up and indicate that capacity is the constraint, not demand.
On the other hand, Infosys may be borrowing revenues from the next quarter to feed the current one. But Kris Gopalakrishnan, the co-chairman of Infosys, said the decision to shorten two weekends represents nothing out of the ordinary. It has been done in the past too and is based on client requirements.
"There is nothing unusual as far as I am concerned and I cannot comment about what others are saying," he said. In the short term, the global uncertainty is affecting all software services companies but prospects are very good in the long term, Gopalakrishnan said.
Wipro and Cognizant, ranked just behind Infosys, said they are not burning the midnight oil by asking all their employees to work extra days. J P Morgan's George was of the view that Infosys risks annoying employees by asking them to sacrifice some Saturdays.
"There is also the aspect of staff humor and mood that needs managing. Infosys' quarterly annualised attrition should be a keenly-watched indicator in current and coming quarters," he wrote.
Sudin Apte from advisory firm Offshore Insights said the move may be intended to improve capacity utilisation in a tough environment. His organisation met nearly 300 clients of software services firms and came away with the impression that IT budgets in 2012-13 would shrink.
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