Infosys, India?s second-largest software services exporter, which reported an improved performance in Q1 of FY14, witnessed some disappointment in Europe with revenue declining on a sequential basis. Over the last three quarters, the continent has been the surprise element for Infosys, growing faster than the US, its largest market, despite the region?s macro-economic concerns.

In the June quarter, however, the North American market swung back with a 4.9% sequential growth backed by steady performance across verticals, while the European buisness shrunk 3%. BG Srinivas, board member and head of Europe at Infosys, told FE, that the decline in revenue from Europe was because of its large exposure to discretionary spend, which is about 40% unlike its global average of 33%.

?To that extent our business could be facing volatility in Europe compared with other regions,? he said. During the April-June period, Europe contributed 23.6% to overall revenues, down from 25% in the previous quarter ended March. In the same period, North America contributed 61.4%, up from 60.2% in the previous quarter.

?As a percentage, US economy is recovering faster and business traction from the region is increasing,? said Srinivas, adding that the pipeline in Europe is reasonably good. ?We have a broad-based presence and are not dependent on just one sector.?

The firm is aiming at getting higher share of the non-discretionary spend if the markets in Germany and France open up. According to Infosys, in continental Europe, consulting and system integration (CSI) business contributes higher than 45%.

The IT major currently has identified opportunities in the areas of infrastructure, vendor consolidation, including enterprise data management (EDM) and deals in areas of production support in Europe.

During the June quarter, Infosys bagged new large deals in the European region spread over three to five years in sectors including energy, retail and manufacturing. The firm is confident of posting better growth in the coming quarters backed by strong deal pipeline and large presence in the region.

?It is just a one quarter aberration we will not read too much into it. Couple of quarters ago we had a spike in Europe revenue. This is one off and not cyclical,? said Srinivas.

Recently the company won a large strategic consulting engagement with a leading power engineering firm in Europe. ?In the manufacturing sector also we are seeing further simplification process in the IT landscape, which is leading to an uptick in demand in the consulting and systems integration vertical. Analytics is seeing an increase in demand as it is also an area of spend, particularly in the retail sector,? the Infosys official said.

In the first quarter of the current fiscal, Infosys added three new clients in the energy space in Europe including two in the continent and one in the UK across areas of consulting and outsourcing. ?We had a major win in the manufacturing space with one of the leading automotive company in Germany. All these deals are long term with a minimum period of three years. Compared to US our sales team in Europe is disproportionately higher because of the complexity of the geography,? he noted.

At present, Infosys has 18 offices in Europe, three near-shore development centres with a total headcount of about 7,800 people. UK is one of the largest segment for the company in the region and it has presence in countries such as Germany, France, Switzerland, Belgium, Netherlands and the Nordic region.

?We continue to focus on the core markets of Europe. There is now an increased traction in the Nordics so we are focusing on that region particularly,? said Srinivas, adding, ?Our Lodestone acquisition has given us a big push in the continental market. We had some recent joint wins, but there is more to do in terms of driving synergies.?