BREAKINGVIEWS-Infosys U.S. woes tarnish India's star sector
HONG KONG/MUMBAI, April 16 (Reuters Breakingviews) -Outsourcing was a bright spot amid worries about India’s growth prospects. But an investigation into alleged visa violations by Infosys could herald a tougher time for the industry. Until the IT group’s papers are in order, investors have another reason to shun Indian stocks.
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- Infosys shares slid 13 percent on April 13 after the company forecast slower-than-expected revenue growth in its current fiscal year. The technology and outsourcing company reported a 27 percent increase in fourth quarter net profits, to 23 billion rupees ($449 million). But it said it expected revenues in the year ending March 31, 2013, to grow between 8 percent and 10 percent to as much as $7.7 billion.
- In its financial statement, the company said it had been notified by the U.S. Attorney’s Office that it and certain employees were targets of an investigation over its use of business visas. It said it was also being reviewed by the U.S. Department of Homeland Security, and that the department had found errors in its employee documentation which may be subject to fines and penalties.
- Infosys has denied the allegations and issued a statement April 13 saying: "Any allegation or assertion that there is or was a corporate policy of evading the law in conjunction with the B-1 visa program is simply untrue."
- Reuters: Infosys' slower revenue growth outlook slams shares [ID:nL3E8FD31F]
Weak transmission [ID:nL3E8FC47B]
Incredible, India [ID:nL3E8ER3J9]
(The authors are Reuters Breakingviews columnist. The opinions expressed are their own)
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