Infosys sees difficult year ahead

The Indian IT sector has been hit by the global downturn

Indian outsourcing giant Infosys has reported a 29% rise in fourth quarter profits but warns it will see its first fall in annual revenues in 2009/10.

It blamed the gloomy prognosis on the difficult global economic climate, which has halted growth for India's once booming IT services sector.

It expects revenue for the year ending March 2010 to fall as much as 6.7%, to between $4.35bn (£2.9bn) and $4.52bn.

Net profit in the January to March period 2009 rose to $325m.

"Guidance is not that impressive. It points to a cautious outlook and lack of business drivers in the bottom line," said Kevin Trindade, an analyst at KR Choksey Shares and Securities.

The software services sector in India has been hit by a large accounting fraud at Satyam Computer Services, once ranked as India's fourth-largest IT firm.

Satyam founder Ramalinga Raju said in January that its profits had been overstated for years.

Shares in Infosys fell by up to 7.7% in Indian trading before recovering slightly.