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Abhrajit Gangopadhyay
Vishwanath Kulkarni

The growth in telecom service providers was likely to surpass growth in research and development initiatives from telecom products companies in the near term.

Bangalore , Sept. 8

SOFTWARE major Infosys Technologies expects to add close to 2,000 engineers over the next 18 months to its telecom practice division tracking strong growth prospects, especially in the service provider space.

Currently, the telecom practice of Infosys, better known as CAPS (Communication and Product Services Practices), has close to 2,200 people.

"We expect to be 4,000-strong by the next 18 months," said Mr Parameswar Y., Head CAPS and Associate Vice-President, Infosys, adding that most of the hiring will be for the Chennai and Pune development centres.

Such manpower projections are on the back of current traction in the existing big-ticket accounts such as Cisco, Nortel and Lucent and orders in the pipeline. New accounts such as SBC and BT are likely to power future growth.

The company has added about 200 engineers in the last three months and expects to add between 300-400 over the next six months, he said.

The growth in telecom service providers was likely to surpass growth in research and development initiatives from telecom products companies in the near term. Contribution from the service providers to the telecom practice revenue was close to 50 per cent as against the company's projection of 40-45 per cent in the last year.

"Service providers could edge out the box makers" in terms of topline contribution in the current fiscal, Mr Parameswar said. However, the overall contribution of telecom practice to Infosys' revenue is likely to stay flat year on year at 16.3 per cent in 2003-04. "This is because the telecom sector is not growing at the same pace as Infosys would grow," he added.

According to Mr Parameswar, the telecom downturn is yet to touch its bottom and "things could improve" from the next year. Most of Infosys clients have agreed to hold on to the current rates without asking for major cuts in the current year. "We expect an improved pricing environment in the next year", Mr Parameswar added. The new client wins have also come at marginally higher rates than the average existing rates.

Since most of the global telecom majors are still cramped for topline growth, no new product development initiatives are coming to Indian vendors. "It is mostly upgradation of existing products, feature enhancement, testing and maintenance work" which are currently flowing to software exporters such as Infosys.

Certain external issues such as the backlash especially in the UK and Australia against outsourcing are hindering offshoring efforts to India, Mr Parameswar said. Citing recent outbursts from the worker's union in the UK against BT's job shifts to Indian vendors, he said, "Such external factors have to be dealt with sensitivity" and it would continue to limit upsides in the telecom practices in a major way.

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