The country’s second largest software firm, Infosys Technologies Ltd, will invest $70 million over the next three quarters of the current financial year towards increasing its sales and marketing staff overseas, building new capabilities and hiring local resources for its international centres.

In an exclusive interview with FE, S Balakrishnan, chief operating officer, said the company would invest close 1.5% of its yearly revenue towards that end.

The company, which reported its earnings for the quarter ending June 2009 on Friday, said though the business environment continued to be challenging, it planned to build up its sales and marketing efforts, “in order to be ready for the growth, whenever it happens,” Balakrishnan said.

On being asked if the investment would flow to the key markets of the US and Europe or to newer emerging geographies like the Middle East, he said, “The investment will be more in the space we are currently operating, as we want to build a front-end there. For instance, Europe is a key market for us as it’s important to get the local talent and language capabilities there.”

In line with the management view of other IT companies, Infosys said that though it was seeing some increase in volume growth than what was predicted in the beginning of the year, things have not stabalised, which make the company cautious about the next few quarters.

Balakrishnan said that most of the new business was coming from existing clients “as new clients will take more time to ramp up in an environment like this”. Moreover, new deals are more in the traditional space like application development and maintenance, BPO and infrastructure management while discretionary spending continues to be tight. “In the short term, we would like to focus on the key market of the US and Europe. India also could be a large spender of IT, but that would happen gradually,” he said.

During the quarter, the company’s effective tax rate was at 20% and it hopes it to remain at the same level during the year. However, the changes announced in the Budget, which has increased the minimum alternate tax (MAT) rate from 10% to 15%, will not impact the company’s balance sheet. “Our actual tax rate will be higher than MAT. So there will be no impact. Even in the next year, our tax payout will be higher than MAT,” he said.

As far as the extension in utilisation of MAT credit is concerned, Balakrishnan said that the company might utilise it this year. While some of its units are expected to go out of STP this year, others will go out next year. The Budget has extended the sunset clause of the STPI scheme by one year.

Unveiling strategies

•Though the business environment continued to be challenging, Infy plans to build up its sales and marketing efforts

• Europe is a key market for the company as it’s important to get the local talent and language capabilities there

• Most of the new business was coming from existing clients “as new clients will take more time to ramp up

• The company?s actual tax rate will be higher than MAT. So there will not be any impact