These are tough times, not just for the ones following lockdown sitting in homes but also to industries. This time is marked by job losses, salary cuts and bad news from all around.
Multinational companies are registering unprecedented losses, with top giants laying people off and cutting salaries of their employees to bring down company expenses and costs.
News coming in from the Bengaluru-headquartered IT services exporter Infosys, says that due to the Covid-19 led slowdown, many projects of the company have been terminated, which may possibly hit the profits earned by the company and its forward path.
Infosys Worries about Ngative Impact on Profits
In the 20F filed with the US Securities and Exchange Commission, Infosys said that if they are unable to eliminate fixed or committed costs in line with reduced demand, their profitability is bound to go negative.
Additionally, any sudden change in demand may impact utilization in (the) short term thereby impacting margins.
Infosys explains that since some clients may dispute some of the existing work-in process that has been recognized as unbilled revenues by Infosys, this fact could marginally impact the profits of the company as well.
Infosys has withdrawn its growth guidance for the first time citing uncertainties in clients’ business in the pandemic session.
The company states in its filing that some of the specific consequent risks related to the occurrence of Covid-19, which have materialized include delay and suspension of some existing services projects.
Infosys Says ‘NO’ to Employee Benefits and Delay in New Joining
Besides showing low confidence on generating profits amid lockdown, the Indian tech services major has also indicated towards reduction in certain employee benefits and an expected delay in the onboarding of new employees.
When asked about the company’s ‘ability to honor job offers on a timely basis can get impacted’, Infosys responded that due to the uncertainty in demand from the client’s end, the company might have to implement severe cost control measures including reduction in employee bonuses.
This could lead to increased attrition of employees and/or a higher expenditure on recruitment and subcontracting services, thereby impacting the profits.
Not just this, Infosys has also talked about possibilities of a global economic uncertainty impacting the demand for services, comparing it with the financial crisis in 2008.
Infosys chief executive officer Salil Parekh’s total remuneration increased by 27% to $6.15 million, in FY 2019-20, while the chief operating officer Pravin Rao’s remuneration witnessed a 29% rise to nearly $2.3 million.
Parekh was granted a significantly higher number of performance-based restricted stock units compared with the corresponding fiscal year and saw a more than 50% rise in value of granted RSUs.