The Hindu Business Line : Infosys may see slight erosion in margins

The company also expects the rupee to appreciate by three-four per cent in the next fiscal in a stable pricing environment. However, wages are likely to go up by 10-15 per cent.

Last year, Infosys had projected that a strong rupee was likely to shave Rs 100 crore off the current fiscal's revenue, as it would erode the value of cash earned outside the country. Several top software vendors have started buying forward covers to hedge their foreign exchange risks.

Meanwhile, despite the backlash against outsourcing gaining momentum in the US, Infosys has seen client visits almost double during the last three months. "This lends credence to our belief that offshoring is a long-term play... business models built on this delivery model seems the flavour of the season," an analyst with a foreign research firm said.

A better pricing would help the company shore up its operating margins going forward even as it attains economies of scale breaching the $1-billion revenue mark this fiscal

It may be recalled that top Indian software vendors have indicated the return of pricing discipline in the market. With growing volumes in business and stable pricing, topline growth seems "assured", the analyst added.

Infosys, which managed to retain its net operating margins even during the tech-meltdown, reported a sequentially flat margin at 26.6 per cent in its December quarter. On the operating level, it reported margins of 33.3 per cent in its third quarter, marginally up from 33.2 per cent a quarter ago.

The company reported that 92 per cent of third-quarter revenue came from repeat business, with onsite contributing 53.4 per cent, down from 54.1 per cent a quarter ago.

The share from offshore grew to 46.6 per cent from 45.9 per cent as the drift towards offshoring continued.