Infosys sees growth in e-enabling

Infosys, which was started in 1981 with just $ 230 borrowed mainly from the wives of its six founders, became India’s first company to list on the US’s Nasdaq exchange last year.

Murthy said the company saw e-enabling, particularly with Fortune 1000 and Fortune 2000 companies, as its biggest opportunity. Internet services account for 28.7 per cent of the company’s first quarter revenues now but Murthy expects revenue to grow steadily.

The contribution from Internet services has seen a substantial jump over the past few years. Eight quarters ago the sector accounted for just 1.8 per cent of total revenues.

Murthy said concerns about Internet e-commerce projects requiring more interaction with customers were offset by the higher margins involved. "It’s true that e-commerce would require a greater on-site presence, but we have to realise that margins in e-commerce are much higher," he added.

Murthy said his firm also expected to hold net income margins steady this year after having cut costs and enhanced revenue productivity. "Net income margins have been 33.4 per cent or so. I would say that we have enhanced the per-capita revenue productivity, have reduced our costs and if those things happen I believe that we will be able to have reasonable net income margins," he said.

When asked if he could maintain the 33.4 per cent level, he said: "Something like that." Murthy said contributions from infrastructure like optical switching and broadband wireless provided good opportunities. "There is no doubt optical switching and broadband wireless are providing opportunities and companies like Infosys can not be away from these opportunities," Murthy said.

"Last quarter, 18.5 per cent of the revenues came from telecom and data-comms and we will continue to focus on those opportunities." Murthy said his firm was studying various acquisition options.

"Any opportunity that brings complementary value to Infosys, any opportunity that makes one plus one equal to at least three, if not 11, that’s the direction we are looking for," Murthy said.

He said the acquisition could be in areas such as consulting or strategic information technology, or it could be a company that provided a methodology or tool set that could be used across a wider section of Infosys.

"Our target is to provide end-to-end services, which requires the knowledge of both domain expertise and technology expertise. We are moving from technology expertise to more and more domain expertise, which is the consulting part," he said.

"At this point we have not looked at any Indian companies. Primarily (we are looking) in the US, and we have not set any time-frame for acquisition," he said when asked if Indian companies were on the list of acquisitions.