Infosys Ltd cut its full-year revenue outlook because of the debt crisis in Europe, sending down the shares of the No.2 Indian software services exporter by as much as 7.7 percent to their lowest in more than a month.

Infosys

Infosys

India's export-driven software services companies are bracing for a slower pace of outsourcing contracts due to the troubles in Europe, Infosys's second-biggest market.

Bangalore-based Infosys forecast dollar revenue growth of 16.4 percent for the fiscal year to March 31, down from 17.1 percent to 19.1 percent projected in October.

The company, however, managed to beat street forecasts with a 33 percent rise in its fiscal third-quarter profit as a weak rupee boosted margins.

The outlook of Infosys this year will depend largely on the U.S. and European markets, which contribute more than half of its revenues combined, said Michael Huang, manager of Yuanta India Fund at Yuanta Securities Investment Trust in Taipei.

Its prospect might not be as good as it has been over the last few years. But in the longer term, this is a company that has a solid track record of its management and financial quality, said Huang whose fund owns Infosys shares.

Infosys shares were down 6.4 percent at 2,646 rupees by 0406 GMT, after falling nearly 8 percent to their lowest since November 30. The BSE Sensex was down 0.2 percent.

The reduction in its dollar revenue guidance is a matter of concern, said Dhananjay Mishra, an analyst with brokerage Sushil Finance in Mumbai.

Global spending on information technology will rise at the slowest pace in three years in 2012 as Europeans, worried about the region's sovereign debt crisis, are cutting back on investments, research firm Gartner Inc said last week.

Gartner predicted global IT spending would rise 3.7 percent in 2012, down from its earlier estimate of 4.6 percent. The forecast for Western Europe was slashed to a 0.7 percent drop in spending from a previously expected rise of 3.4 percent.

The global economy, driven by slower growth in developed markets coupled with the European crisis, could impact the growth of the IT industry, Infosys Chief Executive S. D. Shibulal said in a statement.

Comments from Fitch about the risk of the euro's collapse and bankers expressing a grim view over the Greek bailout on Wednesday heightened investor caution about the course of the debt crisis.

The head of Fitch's sovereign ratings urged the European Central Bank to beef up its buying of euro zone debt to support Italy and prevent the euro's collapse.

NET PROFIT RISES

India's $76 billion IT services industry competes with Accenture Plc (ACN.N) and IBM (IBM.N) for orders to maintain information technology infrastructure and build software applications.

More than half of Infosys's revenue is generated from the United States.

Infosys (INFY.O), which is also listed in New York, said consolidated net profit rose to 23.72 billion rupees in the third quarter ended December 31 from 17.8 billion rupees a year earlier, helped by an 8 percent fall in the rupee.

Revenue rose 30.8 percent to 92.98 billion rupees, as the company, whose customers include BP Plc (BP.L), Procter & Gamble Co (PG.N) and Volkswagen AG (VOWG_p.DE), added 49 clients - its strongest pace of client addition in more than three years.

A Reuters poll of 10 brokerages had forecast a profit of 23.1 billion rupees on revenue of 92.2 billion rupees.

The rupee was the worst performer among Asian currencies in 2011, losing nearly 16 percent against the dollar.

The company, worth about $31 billion, fell nearly a fifth in 2011, far more than its bigger rival Tata Consultancy Services (TCS.NS) that dropped 0.4 percent and compared with a fall of about 16 percent in the sector index.