Posts Tagged ‘Infosys’

The government is looking at Big Data to analyze huge amounts data available on corporate as well as individuals to increase tax collections.

As government looks at ways to analyze huge amounts data available on corporate as well as individuals to increase tax collections by studying various parameters like spending patterns, IT companies expect strong growth in Big Data and Analytics business in the coming years.

“Government is planning to use analytics to increase its revenue base,” Infosys vice president and India business head Raghu Cavale told PTI.

He said the country’s tax-payer base is just about 3 crore and the number has been inching its way slowly for the last 5-10 years, which the government would like to see growing at a faster pace.

“The economy has been been expanding, which essentially means that the number of people coming in the tax rate should be more. But it is not so,” Cavale added.

Big Data and Analytics businesses of IT firms aim at storing, sorting and analyzing vast amounts of data across various fields — finance, marketing, healthcare, utilities, climate and transaction records.

According to government data, the total tax payers in the country stood at about 3.24 crore during the 2011-12 fiscal.

“As a nation, we can put together all the data. If you travel abroad, buy expensive jewellery, we can check your digital footprints on online shopping and piece together a person’s lifestyle and through that create a taxable database,” Cavale said.

Citing an example, he said the government in Italy follows people’s lifestyle, travel and spending pattern so as to track those who could be evading taxes.

“So can we use this data analytics to expand out taxable database. Our total direct taxes are only 9% of our GDP, whereas it should be about 18%, and you cannot raise it by taxing people who you have already taxed. You are going to use analytics,” he added.

On government’s use of IT for collecting and utilizing income tax information, Cavale said: “We are discussing with the government many projects. Some have already been tendered, which we have won. Some other people are doing it. Government is very well aware of data warehousing and analytics. It is talking to us as well as other firms.”

The Finance Ministry had collected Rs 4.73 lakh crore in indirect taxes during 2012-13. For the current fiscal, it has fixed the target of collecting Rs 5.65 lakh crore in indirect taxes, comprising customs, excise and service tax. The total collection of indirect taxes stood at about Rs 2,28,550 crore during the first six months of 2013-14.

Infosys’ first earnings announcement after the return of N R Narayana Murthy is expected to put the retired cofounder under a sharp spotlight as analysts seek clarity on milestones that could signal the company’s return to health.
Murthy, who was recalled by the board last month, may have the unenviable task of paring the growth forecast for India’s second largest software services exporter as cross-currency swings shave off gainsthe rupee’s depreciation against the dollar. The industry veteran has sought three years to “rebuild a desirable Infosys” but an anonymous ET poll of 15 brokerages shows that analysts would want to know sooner that the rebuilding is indeed taking roots.
Analysts said that they expect signs of revival and return of growth momentum in about three quarters. The majority of analysts said that they expect the software exporter to pare its growth guidance6-10% given at the beginning of the fiscal. That pales in comparison with Nasscom’s projection of 12-14%.
“Infosys guidance is likely to take centre-stage,” wrote Rumit Dugar and Udit Garg of Religare Institutional Research in a note to clients on earnings expectations. For the April-June quarter, Infosys’ revenue reported in dollars is expected to grow at a tepid pace of 1-1.5%, which is estimated to be well below that of Tata Consultancy Services, Cognizant and HCL Technologies but likely better than Wipro.
Given Murthy’s philosophy of predictable growth, there is also an expectation that Infosys may bring back the practice of giving earnings guidance, which it stopped last quarter. At least two analysts polled said they expected Infosys to reintroduce earnings guidancethe next quarter, if notthe current one.
Despite the currency depreciation, which is expected to trickle down to the bottomline, Infosys is expected to report a marginal fall in net profit as it absorbs the effects of an unexpected June wage hike. Falling pricing will also add to pressure on profitability, analysts said. Given that rivals such as Cognizant and TCS are capturing a larger share of the market, Infosys is unlikely to be able to maintain pricing levels, leading to erosion in profit margins.
While the expectations are high, it is not so much about the first quarter numbers, but about visibility into future growth. “NRN’s return implies that any disappointment in first quarter may be overlooked,” said Sandeep Muthangi, an analyst with IIFL. “What analysts will be watching out for is details on the roadmap and the specifics on the changes that Murthy is seeking to bring about.”
The ET poll showed that only a few analysts expect Infosys to return to industry leading growth before the next fiscal or the one after that. Accenture and Oracle performing below expectations has also sobered expectation levels among industry observers.
“Accenture’s weak consulting growth indicates that there is still no improvement in the discretionary spending environment, which is likely to hurt companiesInfosys more due to its relatively high exposure to discretionary segments,” Nomura analyst Pinku Pappan wrote in a recent note to clients.