Infosys Technologies was able to mitigate the impact on its margins of the rising rupee, wage increase and incremental visa cost by higher utilisation, pricing, volume and cutting down losses of its subsidiaries.
?The overall impact on the operating margin was 7%, but the net impact was 3%,? chief financial officer V Balakrishnan said.
He said while rupee appreciation had 3.5% impact on the operating margin, wage rise – 13-15% offshore and 5-6% onsite – had an impact of 2.5% and visa costs 1%, an overall impact of 7%. But by increasing the utilisation by 3%, blended pricing by 1%, volumes by 6.9% and cutting down losses of its subsidiaries to 1%, they were able to benefit 4% and bring the net impact on margin down to 3%. “We will maintain margins for the full year in a narrow band,” he said.
Balakrishnan said Infosys had a forward cover of $925 million as on June 30. “The rupee may further appreciate in the narrow band of Rs 39-41 to a dollar. We have to see how the rupee is going to move in the next three quarters and depending on how it is going to move, we will increase hedging. All the currency markets are going to be volatile,” he said.
Infosys had 73% of its revenue coming in dollar terms, with North America contributing 62.6%, Europe 26.8%, India 1.8% and rest of the world the remaining 8.8%.
Infosys also said it was able to renegotiate the existing contracts at 1.5-2% higher rates, while the new contracts were coming at 3-4% that helped in increasing its pricing.