India's second largest software services firm Infosys has said changes in policies and laws, both domestic and foreign, and intensifying competition in the technology services market may impact its revenues.
The Bangalore-based IT major said its profitability is being affected by pricing pressures on services, and volatility of the currency exchange rates increased wage pressures in India and at other locations, and rise in taxes or the expiration of tax benefits.
The firm in a filing to the US Securities and Exchange Commission (SEC) said earlier this week that the global environment is still facing uncertainty.
It said that recently, some countries and organisations have expressed concerns about a perceived association between offshore outsourcing and the loss of jobs.
Infosys added: "With the growth of offshore outsourcing receiving increased political and media attention, especially in the US, which is our largest market, and particularly given the prevailing economic environment, it is possible that there could be a change in existing laws or the enactment of new legislation restricting offshore outsourcing or imposing restrictions on deployment of and regulating wages of work visa holders at client locations, which may adversely impact our ability to do business in the jurisdictions in which we operate especially with governmental entities."
Citing the example of Ohio in the US, it said the governor of Ohio has issued an executive order prohibiting any cabinet agency, board or commission of the state from expending public funds for services that are provided offshore.
"It is also possible that private sector companies working with these governmental entities may be restricted from outsourcing projects related to government contracts or may face disincentives if they outsource certain operations," it said.
Infosys added that retaining talent is important for maintain the company's profitability.
"If we are unable to motivate and retain technology professionals, this could have an adverse effect on our business, results of operations and financial condition," it said, adding that changes in policies or laws may also affect the ability of technology firms to attract and retain personnel.
Infosys also said: "...the central government or state governments in India may introduce legislation requiring employers to give preferential hiring treatment to underrepresented groups.
"The quality of our work force is critical to our business. If any such central government or state government legislation becomes effective, our ability to hire the most highly qualified technology professionals may be hindered."
Infosys has said it expects revenues to grow at 6-10 per cent for 2013-14 fiscal, much below IT industry body Nasscom's industry growth projection of of 12-14 per cent.