Infosys plans to cut U.S. dependence to 40 pct

Infosys Technologies plans to cut dependence on the United States to about 40 percent from more than 60 percent now, its chief executive said, as a slowdown in the world's largest economy hits outsourcing deals.

Infosys, which got 63 percent of its revenue from the United States in the June quarter, planned to boost contribution from Europe to 40 percent from 27 percent, while other markets would account for the remaining 20 percent, CEO S. Gopalakrishnan said.

"We will continuously evolve and change," Gopalakrishnan told Reuters in an interview on Friday.

"It's also driven by realization that emerging markets are contributing more to the global GDP growth, that's where the growth is faster." He declined to set a time-frame for this, saying: "It's not that you need to do it tomorrow, that you have hit a wall."

Earlier this month, Infosys, India's second-largest software services exporter, beat forecasts with a 21 percent rise in quarterly profit but warned of challenging times ahead as its major Western clients battle weakening economies.

Indian outsourcing firms such as Infosys and its bigger rival Tata Consultancy Services are rapidly expanding to Europe, Asia, the Middle East and Latin America to cut their dependence on the United States.

Gopalakrishnan said Nasdaq-listed Infosys was also focusing on markets such as Japan, India, Australia, China, the Middle East, Canada and Latin America due to growing technology spending in these markets.

"These are new growth engines for us. We are investing in those markets and adding sales capacities," he said. "Some momentum is being built and if it's sustained over time I think this will have a positive impact on the company."

Despite mounting turmoil in the global financial industry, Infosys is not seeing downward pressure on prices that it charges its clients, but Gopalakrishnan said it doesn't expect an increase in billing rates either.

Infosys, which develops applications, designs supply chains and offers back-office services, counts ABN AMRO, Goldman Sachs and Philips Electronics among its more than 560 clients.

Gopalakrishnan, one of the seven founders of Infosys which was set up in 1981, expects the consulting business unit to break even in the current financial year to March 2009, as it taps more customers for this high margin service.

In the last financial year which ended in March, the consulting unit reported a loss of $13 million.

"It is a conscious choice for us to continue to invest in it," he said. "It is good business... It is a piece that is required if you want to be a full services company."

Shares in Infosys, which the market values at $21 billion, ended nearly 1 percent lower at 1,550.30 rupees in a Mumbai market which fell 3.4 percent.

Source : Sharekhan.com