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Infosys CFO On...
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financial results in Bangalore. The company announced a consolidated net profit of
Rs 46.59 billion (US$ 1.164 billion) for the year which ended on 31 March a 20.82 per cent
growth over the corresponding period a year ago (AP)
Infosys Technologies, India's No. 2 software services exporter, posted a 9.6 per cent rise in quarterly profit on Tuesday, slightly lagging market forecasts, as a sluggish US economy hurt demand for outsourcing.
Following are highlights from an interview with Chief Financial Officer V. Balakrishnan.
On deal pipeline:
The deal pipeline continues to be good and we are not seeing major delays. Business momentum continues to be strong. There are short-term challenges, but in the medium to long term, I think it is going to be much more favourable for offshore players.
We are not seeing any major delays or major cancellations in projects. Customer addition is still healthy. Of course, some of the customers are taking time to finalise their IT spending. Some of the projects could get postponed.
There are lots of opportunities in the marketplace. In fact, in the last quarter, we did around four large deals. There are 15 large deals in the pipeline. These are all more than $100 million in revenue for over 4-5 years.
If you look at the full year (2007/08), we were able to maintain the operating margins at the same level as last year, in spite of losing Rs 20 billion ($500 million) on the top line and 10 billion on the bottom line because of the rupee appreciation of 11 per cent. I think it is a commendable achievement.
On business environment:
We believe there are uncertainties in the global economy and it is creating some short-term challenges. We are assuming the first quarter to be flat as compared to the March quarter.
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On global tech spending:
We did a survey ... in 76 per cent of the cases the budgets were either flat or slightly down. Of the balance 24 percent we are seeing customers increasing their information technology budget.
But what is relevant for players like us is the offshore allocation within the budget. Our interaction with all the large clients clearly indicate that offshore (spending) as a percentage of information technology spending is going to go up.
So we are comfortable with the guidance that is based on the feedback which we received from the clients. We believe that offshore is going to be a big, big winner in this kind of environment.
On market impact on financial services:
I think the financial services industry is aggressively pursuing offshoring because they want much more efficiency on the cost side. Financial services will continue to be a good growth area for us.
On billing rates:
Our billing rates are at reasonable levels today. We are not seeing billing rates going down, we believe it will be stable. Last year we have seen a good increase in billing rates. Next year we have to see, with all the challenges in the economy. We don't know how far they will go up, but at least we believe it will be stable.