Infosys to invest $11 m in new ventures

After clocking a billion dollars in revenue, infotech major Infosys Technologies yesterday said that it plans to invest $ 11 million this year in its new initiatives which include its subsidiary in China, a banking business unit and an information technology (IT) consulting arm.

The company also said that with a view to becoming a global player, it was expanding its presence to countries like the Czech Republic, Mauritius, Canada and China. Infosys would be employing 500 Americans for its consulting outfit in the next two to three years.

Briefing the media on Infosys' future strategy, Nandan Nilekani, chief executive officer and managing director, Infosys said, "During the year, the company's topline is expected to grow at 30-31 per cent and earnings at 27 per cent. We expect investments in three initiatives to be about $ 10-11 million ."

Nilekani said the company would invest $ 5 million in its Chinese subsidiary. Infosys would also invest $ 20 million in its consulting arm in the US, over a period of time. Infosys has hired four global IT experts to head the consulting business with a view to take on top IT consulting firms like EDS, Accenture and Deloitte Consulting.

Nilekani said that Infosys' ability to keep costs down has enabled the company to offer high quality services at cheaper rates compared to its competitors.

"The model that we have espoused has become the accepted norm. But it will take a while for other companies to catch up with Infosys. In striving to drive down costs, competition can go through a very traumatic experience," he added.

Highlighting the 'end game' in IT services, Nilekani said that companies which can combine IT services with consultancy effectively will stand out as winners and Infosys was not very far away from achieving this end.

In order to cushion the impact of an appreciating rupee, Infosys has sought permission from the Reserve Bank of India (RBI) for greater freedom in hedging its foreign exchange risks. "We are in discussions with the RBI to allow us greater freedom in hedging.

Currently we are allowed to hedge up to 50 per cent of the previous year's revenues but that is not enough. If regulations allow, we can hedge our net foreign exchange for the entire year," Nilekani said.

On the human resource front, Infosys is planning to hike salaries of its employees by 17 per cent during 2004-05.

Infosys had announced revenues of Rs 4,760.89 crore for 2003-04, and rewarded its shareholders with three bonus shares against each share held. The firm announced a final dividend of Rs 15 per share of Rs 5 and a special dividend of Rs 100 per share.