Infosys Expects Outsourcing Services to Recover in 2010

Courtesy: http://online.wsj.com/

Infosys Technologies Ltd. expects the outsourcing of information technology services to recover "sometime" in 2010, the Indian software exporter's chief executive said Friday.

"Clients are saying that IT budgets would be down this year, in some cases significantly," S. Gopalakrishnan told reporters on the sidelines of an industry event.

"Even where IT budgets are finalized, there is going to be a delay in spending as clients wait and watch the evolving [global economic] situation," he added.

Indian software companies earn most of their revenue from exports and their revenue growth has been hurt due to lower technology spending by global clients.

Nasdaq-listed Infosys earns about 60% of its revenue from the US and about 90% from exports.

Earlier this month, software industry body NASSCOM had cut its outlook on the sector for the current fiscal year.

It now expects the sector to grow at 16%-17% in the year ending March 31, compared with its previous estimate for a 20% expansion.

Infosys has earlier said it expects the next fiscal year beginning April 1 to be tougher, given the adverse economic environment in which its clients operate.

In a bid to control costs, Infosys is likely to give "minimum" wage hikes due in April, Mr. Gopalakrishnan said. "We are taking a look at lowering discretionary costs; travel costs are one of them."

Chief Operating Officer S. D. Shibulal, earlier in the month, had said that increase in wages for offshore staff are likely to be in single digits compared to 14%-15% in the current fiscal year ending March 31.

Offshore employees work for clients from the company's facilities in India.

Mr. Gopalakrishnan added that company continues to recruit, but "selectively."

"We will honor all our [campus offer] commitments [for the next year through March]," he said.

The company has made 18,000 campus offers for the next year through March.