Infosys arm shifts focus from buys to revenues

Written by Rachana Khanzode | Mumbai | Updated: Jan 18 2011, 04:34am hrs
Infosys Consulting, the strategic consulting arm of Infosys, is looking to double its revenues this year, a senior official said. Infosys was earlier said to be looking out for an acquisition to grow this subsidiary inorganically. However, having seen high growth already, the company is unlikely to pursue acquisitions in a big way.

The consulting arm has been witnessing high end growth and we are expecting revenues to be in the range of $180-200 million this year. We have about 1,000 consultants working in the US, Infosys Technologies, COO and chairperson for Infosys Consulting, SD Shibulal said. The firm reported revenues of $98.65 million in the last financial year ended March, 2010 with an employee base of 469 people.

Consulting has been high growth area were most Indian IT firms have not been able to break through. Indian IT firms compete with large consulting firms like Accenture, Atos Origin, Capgemini and Deloitte Consulting in this space. Largely it is said to be a high margin area that involves strategic planning and consulting. However, IT firms have been focusing on the application implementation and maintenance work which is a low margin area.

But, Shibulal views consulting to be high revenue area than high margin area. He adds that the company's premium pricing continues to be in the range of 10-15% and that the firm has seen marginal corrections. Our premium pricing continues to be substantial for our transformational and consulting deals. The billing rates for pure consulting work also continues to be substantial, despite concerns over the economic environment, he added. However, this seems to have diverted Infosys' view of growing the consulting arm inorganically. Though we are constantly looking at acquisitions, this has put the priority of acquiring a consulting firm marginally at the back end, he said.

CEO and MD Stephen R Pratt is earlier said to have indicated the firms intention to grow its geographic presence across Europe, South America and Asia. According to Infosys annual report 2009-10, during the financial year ended March 2010, the firm invested about $ 10 million in Infosys Consulting.