Brexit may create walls, but brings opportunities: Sikka

Infosys CEO's comments come a day after larger rival Tata Consultancy Services said it is keeping a close 'watch' on the European market, but is yet to see any client-specific negativity.

Infosys chief executive officer Vishal Sikka on Friday said Brexit has led to uncertainty in the near term, but expressed optimism that it may also offer revenue growth 'opportunities' as new demand for technology services and integration comes up in medium to long term.

"Banks are trying to figure out what changes need to be made and what it means for near-term spending... Unfortunate as it is that some of these walls are being created due to Brexit, it does create more need for services, integration, more need for ways to interact across boundaries. So, it means opportunity for revenue growth," Sikka said.

In the near term, he admitted, there may be uncertainties.

"But it is too early to tell. . . so far we have not seen any impact," he added.

For the full year 2016-17, the country's second-largest software services firm slashed its revenue forecast to 10.5-12 per cent in constant currency terms, lower than previously estimated 11.5-13.5 per cent.

The company attributed the cut in guidance to the macroeconomic uncertainties.

"So far, Brexit has had no impact on us. But as we look ahead, this is clearly something that many banks are worried about. . . it creates this opportunity for us in the medium to long term, but in the near term, we do not know how this will play out.

"Given this, we lowered our guidance," he said.

The outlook translates into 11.7-13.2 per cent revenue growth in rupee terms, and 10.8-12.3 per cent in dollar terms.

Sikka's comments come a day after larger rival Tata Consultancy Services said it is keeping a close 'watch' on the European market, but is yet to see any client-specific negativity.

Infosys derives 23 per cent of its revenue from Europe while TCS has a larger exposure with over 26 per cent of the overall business coming from that market.

For Tata Consultancy Services, in the first quarter ended June 2016, the UK accounted for 14.8 per cent of the revenue, with Continental Europe contributing another 11.5 per cent.

Image: Vishal Sikka. Photograph: Reuters