Infosys CEO: Gloomy Economy Could Slow IT

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Still, in July, Infosys reported first quarter revenue grew by 24.5 percent year over year, reaching $1.16 billion. At that time, Gopalakrishnan noted that, "Although the global economic environment continues to remain uncertain and could impact IT spending in the short term, we see several opportunities for growth as customers relentlessly focus on improving efficiency."

The continuing malaise in the economy likely is leading to such gloomy forecasts. However, there may be other factors at play as well. Some customers, dissatisfied with the results of their outsourcing programs, are looking to other solutions to increase return on investment.

Earlier this year, Deloitte Consulting authored a study entitled, "Why Settle for Less?" Three hundred CEOs, CIOs and directors who spent at least $50 million in outsourcing were interviewed, in addition to some outsourcing providers. Of the respondents, 39 percent said they had ended an outsourcing deal and went to another vendor or brought the function back in-house. Further, 61 percent of those who said they were dissatisfied reported that they had to escalate the problem to senior management in the first year of a contract, and 53 percent of those respondents had to go back to senior management yet again in the second year.

When Gopalakrishnan announced the Axon acquisition this week, he noted it would provide access into Axon's existing customer base as well as a foothold into new markets as well as sectors. The company has not revised its guidance for the second quarter, which ends Sept. 30.