The Hindu Business Line : Infosys rides high on revenue growth

THE earnings season for the software services sector has opened on a positive note. Infosys Technologies clocked a robust second quarter ended September 30, 2005, with a 10 per cent sequential (quarter-on-quarter) growth in revenues and a 13 per cent growth in post tax earnings, after two relatively weak quarters.

The key operating metrics that dominated the latest quarter were:

* Client Composition: The robust growth in the latest quarter is attributable to the bounce-back in revenue growth from the top five clients (excluding the top client) at 7.5 per cent compared to negative growth in the April-June quarter. However, negative growth was recorded from the top client for the second straight quarter. The management, in the earnings call, has clarified that while the growth from the top client is negative, the largest client is not the same client as in the previous quarter. Secondly, the revenue growth from clients between the top five and top ten range continued to be strong for the third consecutive quarter.

* Client pipeline: The company has continued to successfully mine clients in different revenue brackets starting from $1 million and $5 million, going up to $50 million and above. The increase in the number of clients to 48 from 43 in the $10-million, 16 (14) in the $30-million, and 11(8) in the $40-million brackets is encouraging.

* Billing rates: In line with the trend in the past few quarters, the billing rates have continued to remain stable, with an upward bias. The management has claimed that new clients have come in at a 3-4 per cent increase. . Both onsite and offshore rates have been positive at 1 per cent and 0.3 per cent, respectively compared to the negative trend seen on a sequential basis.

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