The Hindu Business Line : IT budgets seen rising 2-6%: Infosys

Infosys Technologies Ltd said on Thursday that it didn't see any slowdown in global economy and expects IT budgets of global companies to rise by two to six per cent in calendar 2007.

"The IT budgets of global companies are being firmed up and we see a 2 to 6 per cent rise based on our client feedback," said Mr S. Gopalakrishnan, COO and Joint Managing Director, Infosys.

The CEO and Managing Director, Mr Nandan Nilekani, said the composition of IT spend is changing as a larger portion of the spending is going offshore. "The risk perception of India is going down in the sense that earlier companies who were willing to have just 1,000 people working for them in India, are now willing to have 10,000 work force in India across their own captive or across partners," Mr Nilekani said, adding that this augured well for the company.

For Infosys, contribution of revenues from Europe is on the rise. Revenues from Europe accounted for 26.8 per cent of Infosys' total revenues in third quarter ended December 2006.

"Except for UK, the Continental Europe, which was traditionally slow, is accelerating more towards offshore," Mr Gopalakrishnan said. The North America accounted for 63.2 per cent of Infosys' revenues during the quarter, while earning from Indian market increased marginally to 1.8 per cent.

Outlook

Infosys expects stable margins for the fourth quarter. "Our guidance assumes stable margins," said CFO, Mr V. Balakrishnan, said, adding that the company has hedged $360 million in forwards and options.

China continues to be in investment mode and the company made losses of $1 million on revenues of $3 million for the quarter. "Customers have slowly started to accept China as a viable option for offshore delivery," said Mr S. Shibulal, head of global delivery, adding that the company has set up offshore services delivery centre for two of its client in China. At present, Infosys has 700 employees in China.

Like China, the Consulting subsidiary also continues to be in an investment mode. Infosys Consulting clocked revenue of $12 million and reported losses of $6.5 million for the quarter.

But, Infosys Australia clocked revenues of $15 million for the quarter and reported net profit of over $2.2 million, said Mr Balakrishnan. Revenues from banking product Finacle grew to $35 million during the quarter from $27 million in the previous quarter.

BPO operations

The BPO operations grew about 20 per cent on a sequential basis and clocked revenue of $40 million for the quarter with net profits of close to $9 million, Mr Balakrishnan said.

Mr Amitabh Chaudhury, CEO and Managing Director of Infosys BPO, said the company saw an improvement in its margins by a per cent to 22.3 per cent, while the attrition came down to 26 per cent.

Further, Mr Shibulal said the company was pursuing about six to seven large deals of over $100 million, which were likely to be decided in the next few quarters. The company signed three to five deals of over $50 million in the third quarter.

Replying to a query on increased threat perception for the company from terror groups, Mr Nilekani said: "We have taken all the necessary security measures to deal with any such potential threat." However, Mr Nilekani declined to share details on the security measures, citing them to be confidential.

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