The Hindu Business Line : Operating margins likely to be stable

Infosys expects its operating margins to be stable and move in a narrow band of 31-32 per cent for the remaining quarters of the current financial year, said the Chief Financial Officer, Mr V. Balakrishnan. The new employee addition is expected to drive down the staff costs for Infy going forward and the company expects to leverage from this.

Of the planned employee additions of 25,000 for the year, about 8,097 have been hired during the quarter. The total employee headcount stood at 58,409. The wage hike and visa costs impacted the margins during the first quarter by 3.3 per cent and 1.3 per cent, respectively. However, this was offset by a gain of 2.2 per cent due to decline in rupee against dollar and two per cent by way of depreciation in investments made in Infy's London office, he said.

The company applied for over 10,000 US visas during the quarter and expects to apply for other country visas in the next few quarters. Mr Balakrishnan said the new clients are coming in at 3-4 per cent higher prices and he expects the pricing environment to be flat. As of June-end, Infy had a forward cover to the tune of $381 million.

Earnings figures

The company derived 64 per cent of its revenues from the US, while its European earnings grew to 26.2 per cent from 23.9 per cent a year earlier. Infy's utilisation rates stood at 69.7 per cent (including trainees) during the quarter compared to 71.1 per cent in the previous quarter. Infy derived 50.5 per cent of its revenues from onsite efforts, while the rest came from offshore. Clients with contribution of over $50 million in the last 12 months increased to 11, while the company reported three customers with over $70 million and two with over $90 million. The largest client accounted for over five per cent of Infy's revenues.

Offshore spending

Further, the offshore IT spending continues to be buoyant, said S. Gopalakrishnan, COO, Infosys. The company expects to benefit if there is a global slowdown as it has perfected its business model and demonstrated its attractive value proposition. "We are taking away the share from the incumbents," he said.

Infosys' Australian subsidiary registered a net profit of Rs 4 crore on revenue of Rs 12 crore, while the China and Consulting subsidiaries, which continue to be in an investment mode, reported losses.

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