India?s second largest software exporter, Infosys Technologies, raised market sentiment when it reported robust Q2 results in October 2009, indicating the end of a slowdown that had curtailed growth for over six quarters. Most recently, software industry apex body Nasscom predicted that the industry would be back on a double digit growth path next fiscal. Markets in the US were on a recovery path, with clients open to more technology outsourcing, Infosys? chief financial officer V Balakrishnan told FE?s Reema Jose in an interview. While the turbulence in the market place had subdued, Indian exporters had cause to worry owing over the fluctuating currency markets. Excerpts:

When you talk about recovery, which services or verticals do you see improving? What will be the next big wave in services when the market recovers?

Mainly in financial services, to some extend in retail. In financial services space, because we see a lot of mergers and acquisitions (M&As) happening and spending in that space has gone up. Most of the clients who have delayed discretionary spending are spending. In retail, more and more stores are going online, there is more use of technology to get services to customers. Today, we have all the services in our portfolio. There is a big wave in offshoring and outsourcing of technology.

Geographically, which markets are improving? How does the domestic market fare in comparison?

The recovery has been seen mainly in the US. Things are better even in Europe. However, in Europe, concerns (related to the recession) are still high. We have seen that Europe lags US in recovery in terms of business. In India, our business is mostly with the government.

Is it time for the industry to go easy on cost cutting?

Cost cutting measures will continue. We have seen in the world that we should run the organisation efficiently and reduce costs wherever possible. We always run the organisation during bad times as we do in good times.

About the currency market volatility ? how is this hurting your company? What are your concerns?

The currency situation is more or less stable now. Our concern is about the high foreign currency inflows. Higher inflows could appreciate the currencies further. In the short-term, it is within a narrow band. But the government should watch the currency inflows.

You have expressed this concern earlier ? how do you suggest that the government could interfere?

The government should look at the quality of inflows. When we say quality, we mean that the government should see that these inflows are coming in for the right reasons. They should be invested in the right areas, where they are stipulated to be invested in. The attention should be given to long-term investments. The government should create an environment within the country where these can be invested quickly. For instance, investments coming into infrastructure should be absorbed and used for development.

On acquisitions, what gaps will you look at filling in terms of services and geography?

We are basically looking at improving certain verticals like healthcare, life sciences, and government. We want to grow our business process outsourcing services and consulting businesses. Growth is desirable also in regions like Germany, France and Japan. An acquisition has to be for strategic reasons.

What is the thinking behind strengthening your focus on sales and marketing? How do you view competition from multinational companies as business pipeline improves?

We want to focus on certain geographies, which is why we strengthen our sales and marketing with more investments. We are also trying to get more Fortune 500 clients. The competition from MNCs will continue, but we have got our global delivery model right.