MS, Infy come together for e-biz solutions

NEW DELHI: Microsoft Corp and Indian software services giant Infosys
Technologies on Thursday announced a strategic global alliance to develop
e-business solutions built around the Internet.

The two companies said their new company would bring them new customers and a
larger slice of the market, and could lead to issues of intellectual property
rights.

But shares of Infosys, the first Indian firm to be listed on the Nasdaq,
slipped after the announcement as traders concluded that the absence of
financial details suggested it was no big deal.

At 1:10 p.m. (0730 GMT) Infosys shares were down 2.15 per cent, or Rs 187.05,
at Rs 8,500 on the Bombay Stock Exchange in an overall market which was just one
per cent lower.

"We realize that the destinies of the two companies have a lot in
common," Microsoft chairman Bill Gates told a joint news conference with
Infosys chairman and chief executive officer NR Narayana Murthy in New Delhi.

"There will be constant technical exchange between these two companies
so that the solutions that come out of this will be the most powerful solutions
in the marketplace."

The companies said in a joint statement that they would develop, promote and
deliver a comprehensive portfolio of Infosys business solution offerings and
enterprise services built using the Microsoft .NET Enterprise Server platform.

They will develop solutions in areas such as customer relationship
management, e-commerce, financial services as well as insurance and retail.

"The relationship combines Infosys' proven solution development
expertise with the scalability and reliability of Microsoft's platform to enable
the delivery of robust, cost-effective e-business solutions to customers,"
it said.

"Infosys continues to build a strong solution development reputation in
the US and other international markets and brings a huge pool of resources
skilled on Microsoft technologies," the statement quoted Gates as saying.

Joint marketing, account planning

The two companies will also undertake joint marketing initiatives and account
planning.

"With over 1,200 professionals trained on Microsoft platforms and
deployed globally, we can effectively leverage access to the very latest
Microsoft technologies into business benefits for our customers," Murthy
said.

Revenues have grown at an annual clip of 85 per cent at Infosys since 1994.
The company started out as a small business in 1981, when India's economy was
still in socialist shackles and the software industry was a global toddler.

But the tie-up with the US giant failed to impress investors on the Bombay
Stock Exchange, where Infosys shares had risen 41 per cent since early August to
Tuesday's close of Rs 8,847. The share was soft on Wednesday as well.

"If it is only this strategic alliance, then it certainly falls short of
what was expected," said Kotak Securities chief dealer Ketan Jhaveri.

Market speculation ahead of the deal was that Infosys would gain from the
outsourcing of business by Microsoft with assured revenues for a period of time.

"There were expectations that today's announcement would reveal some
numbers in terms of what addition to Infosys' bottomline would be there as a
result of the alliance. That has not happened," said an analyst with a
foreign brokerage.

"The market tends to look for these hard core numbers and could ignore
the qualitative and long-term benefits of the relationship," he said.

(C) Reuters Limited 2000.