The Hindu Business Line : US clients delaying budget decisions: Infosys CEO

“Increasingly, managers in client organisations above the level of Chief Information Officers are getting involved. But, the percentage of IT budgets for offshoring is on an uptick.”

Our Bureau

Chennai, Jan. 11

This year, US technology buyers are postponing decisions on IT budgets by nearly a month. Infosys Technologies, in its results announcement today, said that clarity on IT budgets would emerge only during this month end or early next month. Traditionally, IT companies get to know of their clients’ budgets by early January, once the year-end holidays are over.

Responding to a question in a conference call with analysts as to why this is happening, Mr Kris Gopalakrishnan, CEO, Infosys, said: “Due to macroeconomic conditions in the US, there is more due diligence work being done with respect to IT budgets.”

He added that the company is also seeing a different level of participation on budget decisions. “Increasingly, managers in client organisations above the level of Chief Information Officers are getting involved. But, the percentage of IT budgets for offshoring is on an uptick.”

‘Not one-to-one’

Asked if the start of new projects would be delayed pending decision on budgets, Mr Shibu Lal, Chief Operating Officer, Infosys, said: “There may be short-term delays in some projects but a delay in decision making on budgets would not mean a likely delay in the start of projects. It is not one-to-one.”

Stable rupee

Mr T.V. Mohandas Pai, Director and Head of HRD, in comments to sections of the media said that for now the company expects the rupee to be stable.

“In recent opinion polls, 50 per cent of respondents say that they expect the rupee to depreciate. Earlier, the almost-unanimous response was in favour of the rupee appreciating. So, in the short-term, we expect the rupee to remain at these levels.”

However, in the long-term, he feels that the rupee could appreciate slightly more over a period. “Our economy is not big enough to absorb such inflow of funds.” This could trigger demand for the rupee.

Clients’ growth

Mr Pai also felt that there is still room for the growth of Infosys’ top client, which currently contributes to 9.5 per cent of revenue or about $400 million. “Others have top clients contributing to about $500 million. There is no reason why ours should not grow more.”

Asked if we need to sense alarm signals in that the top 10 clients are growing faster than the remaining clients, he said, “This varies from quarter to quarter. Sometimes the top ten grow, at others, the remaining grow. There is no particular trend here.”

Wal-Mart deal?

Interestingly, the company’s press release in the morning said: “The world’s largest retailer has engaged Infosys to define the business and technology strategy for its global ecommerce business.”

However, the later versions did not have this statement on the client, said to be Wal-Mart. It is not yet clear if the deal has been signed or that it hasn’t.

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