Infosys has crossed one billion dollar revenue for the quarter ended September 30 with a growth of 18.4 per cent despite the rising rupee and the sub-prime crisis. The company earned a net profit of Rs 1,100 crores after tax during the period, against Rs 929 crores for the same quarter last year. “We have achieved another milestone by crossing $1 billion revenues in this quarter,” Mr S. Gopalakrishanan, CEO and MD, Infosys, said on Thursday. “In an increasingly flat world, our unique business model combined with our value proposition continued to help our clients grow profitably,” he said while announcing the second quarter results of the Nasdaq-listed company.

Speaking to this newspaper about the rupee issue, Mr V. Balakrishnan, Infosys CFO, said: “The company is maintaining its margin despite losing Rs 2,000 crores YoY in the consolidated income and Rs 250 crores in the net profit.” He said that the company would not suffer in the next quarter even if the rupee appreciates further. “We proactively hedge our currency exposures to mitigate the impact of a rising rupee,” he said. He added that the company is facing challenges like scalability, hiring people on the front end and hiring leaders who can meet the market standards. When asked about the offshore development centres in China, he said, “We currently have 650 people working there and we will be exploring opportunities as and when it comes.”

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Infosys is increasing its exposure to Europe and other regions, besides cutting costs to manage the impact of rupee appreciation against the US dollar, the software giant’s chief mentor N.R. Narayana Murthy has said. “We have been enhancing contribution from Europe and other areas of the world. Now Europe forms 27 per cent of our total revenue when it was 18 per cent five years ago,” he said in an interview to India Business Report on BBC World.

The US, however, remains the most significant market for the country’s second-biggest software exporter. “US is still the most dynamic market, US is the market which believes in innovation in technology, so we do not regret our dependence on that.” Mr Murthy also said the appreciation in rupee value against the dollar was hurting the software companies, including Infosys. “For every drop of one rupee in exchange rate we lose as much as fifty paise or half of that in our margins,” he said. The rupee has risen more than 12 per cent against the greenback since the beginning of 2007.

“We have learnt to control our costs, to improve our per capita productivity, (and) to use technology even better,” he said, while admitting that the company lost its rupee guidance for the first time during the June quarter. Mr Murthy dismissed fears of any backlash against Indian firms in the US with the presidential elections approaching.”We were lectured by our American friends about our opening up and we did… we have listened to their advice and we have so many American MNCs working here… So now to hear that they don’t agree with that philosophy is somewhat strange,” he added.

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The Indian software industry may be facing hard times, but Infosys is bullish about future prospects. Infosys CEO and MD S Gopalakrishnan (Kris) says India will emerge global leader in the software services industry. Mr Gopalakrishnan feels the threat of low-cost locations in other parts of the world is being played up. He says, “India will have the largest location for software services companies. India already has the highest number of software professionals in the world. India will be the primary or largest location for all these companies and the leadership will be here,” Mr Gopalakrishnan (Kris) said.

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Infosys BPO announced on Wedn-esday that it would focus more on the clients based in the countries other than the US to sustain its current 70 per cent annual growth. Infosys BPO Ltd CEO and managing director Amitabh Chaudhry said, “Our current business exposure to the US is around 60 per cent. Since the profit margins of most of finance sector companies in the US are currently going down, we have planned to curtail our current US exposure to maximum 50 per cent level in order to sustain the current 70 per cent annual growth of our company. Also, the last two quarters in the US have witnessed a major slowdown in the economy. We have assessed other overseas locations like Europe and Australia as more lucrative in terms of future growth prospects. Ideally, we wish to maintain our foreign business exposure in the ratio 50 (US):30 (Europe): 20 (other countries).”
Commenting on the effect of the US subprime crisis in India, he said, “The impact of the US mortgage subprime crisis is expected to cause a revenue loss of a $1 million for us in the current fiscal. However, it is too premature yet to assess the exact quantum of the damage.

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Software major Infosys Technologies has established a subsidiary in Mexico.The new subsidiary will help Infosys to establish its services in the region.

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