Infosys Sees Large-sized Outsourcing Deals

Bangalore, Sept 19: | Updated: Sep 20 2003, 05:30am hrs
Infosys Techologies Ltd, Indias leading listed software services exporter, said that the market has ripened for large deals such as its recent $50 million order from Australias Telstra Corp Ltd.

Global Rivals Muscle In

Bangalore, Sept 19: Infosys, benefiting from increased global demand for cheaper outsourcing, beat earnings estimates in July with a 28 percent jump in quarterly profit on the year and raised its full-year profit growth forecast to 17 percent from a previous 13 percent. The 17,000-employee strong company earns the majority of its revenue from North America. Bank of America Corp and American Express Co are among its main customers.
Infosys, which serves 300 global clients on the strength of its low-cost software service, has multiplied revenues to $754 million in the past year to March from about $27 million in 1996. Mr Nilekani, who co-founded the company with six others two decades ago with a capital of $250, said he was not worried about global tech giants expanding operations in India, a development viewed by some as a threat to its business. He said the
Indian operations of global rivals such as International Business Machines Corp and EDS were piecemeal compared with those of Infosys, which involve a complex restructuring of work
centred around Western operations. Reuters

Nandan Nilekani, managing director of the Bangalore-based firm that ranks behind privately held Tata Consultancy Services (TCS), said that outsourcing has become a strategic habit with big clients.

I think offshoring and outsourcing are very much on the mainstream agenda of most of the worlds largest corporations, and they are seeing this not just as a cost play but as a way to improve quality and productivity, Nilekani said in an interview.

Infosys shares closed 1.61 percent lower in Bombay on Thursday, while Bombays main 30-share fell 2.39 percent. Last week, Infosys, which in 1999 became Indias first company to list on the tech-laced Nasdaq, won a $50 million five-year service contract from Telstra, one of its large existing clients.

The Telstra deal softened scepticism among analysts, who have been watching Infosys since its rivals Wipro, Indias second largest listed software firm, and Tata Consultancy last year, jointly won a deal from Lehman Brothers to manage computer networks but hit roadblocks after a technology slowdown and September 11 attacks in the United States.

The company then balanced its ambitious plans to focus on high-margin consulting with its low-cost work based on large-scale hiring, which also faces threats of staff-poaching from big firms such as Accenture, which are furiously expanding their Indian operations.