Infosys sets 16% revenue growth target for 2016-17

BENGALURU: Infosys has set a target of 16 per cent revenue growth, with an operating margin of 27 per cent, for the 2016-17 financial year, an ambitious goal, but reflective of the advances made under CEO Vishal Sikka.

The targeted growth is significantly higher than the 13 per cent that it might achieve this year in constant currency terms, and importantly, higher that the 10-14 per cent guidance for 2016 provided by Cognizant, the company that in recent years has been the bellwether for the industry and which grew by 21 per cent in 2015.

Infosys's target was set at the just concluded Strategic and Action Planning Meet (Strap) held in its Mysore campus. A senior executive in the company called it an aggressive target. "But who said ambition is a bad thing?" he asks.

When TOI contacted Infosys, the company said, "We will give our guidance for FY17 in April. Nothing additional to offer right now."

Analysts and investors are not clear about the achievability of the target.

"Infosys's targets are nothing short of aggressive. Amidst the secular headwinds of organizations moving toward the asa-service economy and slowing market demand, Infosys would not only have to catch up with its peers but leapfrog them. In a nutshell, to achieve those targets, Infosys would have to turn into the pacesetter for the whole industry," said Tom Reuner, managing director at IT consultancy HfS Research.

Infosys's optimism may be coming from its pipeline of orders. Earlier this year, the $9.2-billion IT firm raised its revenue outlook for 2015-16 to 12.8 per cent-13.2 per cent in constant currency, from 10 per cent-12 per cent earlier. At this rate, it could do better than TCS, which for long has had a big lead over Infosys. The company has reported deals of $1.67 billion in the first six months of 2015-16, 85 per cent of the total deals in 2014-15 ($1.95 billion).