BANGALORE: Infosys Technologies Ltd, India's No. 1 listed software services exporter, said that the market has ripened for large deals such as its recent $50 million order from Australia's Telstra Corp Ltd.
Nandan Nilekani, Managing Director of the Bangalore-based firm that ranks behind privately held Tata Consultancy Services, told Reuters that outsourcing had become a strategic habit with big clients.
"I think offshoring and outsourcing are very much on the mainstream agenda of most of the world's 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 Bombay's main 30-share fell 2.39 percent.
Last week, Infosys, which in 1999 became India's 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, India's No.2 listed software firm, and Tata Consultancy last year jointly won a deal from Lehman Brothers to manage computer networks.
GLOBAL RIVALS MUSCLE IN
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.
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 involves a complex restructuring of work centred around Western operations.
"Companies coming here have a different model, which is doing local work in pockets, not in a global way. And to re-engineer that and become our model is not trivial stuff," he said.
Infosys's shares have fallen 11 percent in calendar 2003, tracking losses in Bombay's technology index but lagging a 22 percent rally in the broader index as a profit margin squeeze led investors to cut exposure to the software sector.
Infosys nearly doubled its profit every year in the late 1990s, powered by demand surges in the Internet and telecommunications sector, 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, who are furiously expanding their Indian operations.
© Reuters