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Infosys earnings growth on track

Infosys Technologies is on track to post earnings growth of 26-28 per cent this quarter, helped by a global outsourcing boom.

india Updated: Jun 16, 2006 12:13 IST

Infosys Technologies is on track to post earnings growth of 26-28 per cent this quarter, helped by a global outsourcing boom, the head of India's second-biggest software services exporter said on Thursday.

Chief Executive Nandan Nilekani also said that he was open to using the company's near $1 billion cash pile for acquisitions to get it into a certain market or a new technology, but it would always keep a sizeable cushion in the bank.

"We believe that having cash is strategic so that we can respond quickly to marketplace needs or respond to risk," Nilekani said in an interview on the sidelines of the World Economic Forum on East Asia, taking place in Tokyo.

"We are open to acquisitions but at the same time we are not looking at acquisitions as a substitute for (organic) growth."

Infosys, whose rivals include Tata Consultancy Services Ltd and Wipro Ltd, said in April that it expected earnings per share would rise 26-28 per cent in the current quarter ending in June compared with a year earlier.

"The firm is doing very well and I think the India story continues," Nilekani said. "Our current quarter is on track."

Multinational companies have embraced Indian software services firms as a way to lower costs by outsourcing key processes such as supply chain design and payroll accounting to India's army of low-cost, English-speaking developers.

India's software services industry, which gets up to 70 per cent of its sales from the United States, saw a 33 per cent rise in exports to $23.6 billion for the year to March 2006, and should grow by more than 25 per cent in 2006-07, an industry group said earlier this month.

Nilekani said that Infosys, which has roughly doubled its revenues over the past two business years to more than $2 billion, was gaining market share and would outstrip growth in the industry as a whole. It is planning to hire almost 50 per cent more staff this year, adding 25,000 employees to its payroll.

Bangalore-based Infosys develops applications, designs supply chains and offers back-office facilities to clients, which include Dutch bank ABN AMRO and Japanese electronics conglomerates Fujitsu Ltd and Toshiba Corp.

"Companies are sick and tired of spending billions of dollars on technology with very dubious results," Nilekani said. "They want quantifiable, measurable results. They want high-quality. They want time-to-market. They want things done on budget."

First Published: Jun 15, 2006 17:02 IST