Infosys plays down competition

Playing down the emerging competition from American software services firms like Accenture and EDS, Infosys Technologies managing director Nandan Nilekani said that his competitors were facing an ‘anti-incumbency’ factor in the US market.

He also said that Infosys was much better-placed to become a complete (from consulting to back-end) service provider as compared to its global competitors.

“There is an anti-incumbency factor working in the market because the customer companies are looking at better value of their investments,” Nilekani said. “We are much better placed as we have to go up the value chain to complete the service portfolio. They (US-based competitors) will have to go down the chain, which is quite difficult looking at issues like realigning corporate culture and costs,” he added.

Infosys, however, has decided to hike the salaries of its employees by an average of 17 percent for this fiscal to retain talent in the face of increasing competition for skilled workers.

Nilekani said that the company believed in developing a global delivery model (offering end-to-end solution through mulitple global presence). “It is not just about cost, offshoring or India. It’s an innovative method of doing business in the global market,” he said.

Nilekani said that Infosys would invest $11 million in working towards developing a global delivery model this fiscal. The company will scale up its subsidiary in China, strengthen its banking software products and expand its newly set-up US consulting firm.

“For this year, we expect our topline to be around 31 percent and earnings to be around 27 percent in dollar terms. The difference between the two will be invested in these initiatives across the globe,” Nilekani said.

The company is looking at a headcount of 500 people in its US consulting firm in the next three years. It is also looking at a total employee base of 200 people for its China subsidiary in the next two years with an outlay of $5 million.

Infosys has also approached Reserve Bank of India for allowing more freedom in hedging its foreign exchange risks. “We are in discussions with RBI to allow us greater freedom in hedging. Currently we are allowed to hedge up to 50 percent of the previous year’s revenues but that is not enough.

If regulations allow we can hedge our net foreign exchange for the entire year. But regulations in India do not allow that,” he said.

Source: ZDNet India