Infosys looks to grow outside US

India's second-largest IT services exporter targets Australia, Japan, South Africa.

Infosys Technologies, which has recorded a fall in its revenue share from North America, is looking to reduce further its dependence on the US market, the company's top executive said today.

Simultaneously, India's second largest computer services provider is looking at increasing its revenue contribution from Europe and the rest of the world.

"As a percentage of overall revenue, we want to bring down US may be closer to 50 per cent over time and grow the rest of the world "� may be by 20 per cent in Europe and 20 per cent in Asia Pacific, including Japan," said S Gopalakrishnan, chief executive officer and managing director.

In the just-ended quarter, Infosys reported a nearly one per cent drop in its revenue contribution from North America to 62.3 per cent, as against 63.2 per cent during the same period in fiscal 2006-07.

At the same time, Europe's share in the company's revenue has gone up to 28.6 per cent as compared with 26.8 per cent a year ago. The company has been increasing its revenue contribution from Europe steadily over the past few quarters.

World of hope
"Clearly, we want to grow the non-US markets. We are looking at Australia, Japan, India, Latin America, South Africa apart from Europe. Hopefully, the rupee will not appreciate against all the currencies across the world," Gopalakrishnan said.

The UK, Germany and France were traditional strongholds for Infosys in Europe. The company is also expanding its presence in Switzerland, Belgium and The Netherlands by increasing the on-site presence.

"We will focus a lot on Europe. Because of the maturity of the market, the outsourcing and offshore outsourcing will get adopted more and more over a period of time, though they are definitely lagging behind the US," said S Shibulal, COO, Infosys Technologies.

The company opened a development centre in Mexico recently. It intends to use this facility to provide support to Spanish speaking clients.

It is also looking at using Mexico as its entry point to the Latin American market.

Solutions at home
Infosys has also started looking at the huge opportunities that exist in the domestic market. The company has established an Indian business unit, headed by Naren Kodavatt, a senior member of its management team.

The company has started pitching for small and medium contracts in the Indian market and expects to get a breakthrough soon.

"We have a couple of wins in India which have been quite small, but we expect to bag bigger deals in the near future. We are a large corporation and it takes time to build up," he said.

Shibulal said the focus of the Indian business unit would be solutions and systems integration oriented, rather than application development oriented.

Infosys has also restructured its consulting division in the last quarter, creating a larger unit called Solutions and Consulting. The division would be under investment mode for a couple of quarters. The idea is to do all the consulting and solutions works under a single unit, Shibulal pointed out.

Patents and more
During the quarter, Infosys applied for an aggregate of 16 patents in the US and India. With this, Infosys has filed an aggregate of 109 patent applications (pending) in both countries and has been granted 2 patents by the US Patent and Trademark Office.

The company also said it had voluntarily settled with the California division of Labor Standards Enforcement over possible overtime payment to certain employees amounting to $26 million. The payment pertains to the last three years and such back wages will be paid to the employees in due course.

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SUB STORY
Performance of Infy's arms

Infosys BPO registered revenues of $64 mn in Q3 with a net profit of $7 mn (down 30% Q-o-Q)

The Philips' Account and Finance account taken over by Infosys last year contributed $8.7 mn

Infosys Australia had revenues of $33 mn and a net profit of $5 mn (down 28.5% Q-o-Q)

Infosys Consulting (revenues $17 mn) and Infosys China ($5 mn) are yet to break even

The attrition rate has come down from 14.2% in Q2 to 13.7 % in Q3