Infosys forecasts $3bn revenue

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Infosys, the Indian software group, expects to make more than $3bn annual revenue for the first time this year.

Starting what is expected to be a strong interim earnings season for India’s IT outsourcing sector, Infosys said it expected revenue and earnings per share growth of up to 41.1 per cent in the fiscal year ending March 2007, compared with the previous year.

The company is winning a bigger share of key customers’ technology budgets. “The revenue growth of the top 10 clients for the quarter is 50 per cent,” said Hitesh Zaveri, analyst at Edelweiss Capital in Mumbai.

“The clients that have been working with Infosys for some time are giving them more and more business.”

Infosys, India’s second largest exporter of software and IT outsourcing services, benefited from a rapid increase in demand for its services in its traditional US stronghold and in Europe, particularly the UK.

Nandan Nilekani, Infosys chief executive, said: “We spoke to our clients and we didn’t get any indication from them that their spending was going to go down in any way.” He said, based on this and the strength of its
second-quarter business trends, the company had revised up its full-year revenue forecast for the year ending March 2007 to between $3.03bn and $3.04bn from an earlier forecast of $2.92bn.

The company also said it planned to sell up to 30m shares in another offering of American Depositary Receipts with a total value of up to $1.5bn, based on the company’s closing price on Nasdaq on Tuesday.

India’s software outsourcing sector has forecast exports to rise 27-30 per cent to $29bn-$31bn this fiscal year with the National Association of Software and Service Companies, expecting new contracts of $100bn over the next two years.

Infosys said revenue in the first half of the current fiscal year was $1.4bn, compared with $1bn a year earlier. Net profit was $373m compared with $260m a year ago, exceeding analysts’ forecasts, according to a Bloom-berg poll.

Mr Zaveri said the key for the company was to capture more of the IT expenditure of its 476 customers, particularly the 232 customers that were already spending more than $1m with Infosys.

On an average annualised basis, the company’s top 10 customers were spending $96m with Infosys. Ideally, the company would be aiming to increase the number of customers spending $100m with it to 100 over the next three years. Infosys said it added 10,795 employees during the second quarter – a record for the company, bringing its total staff to 66,150.

Infosys shares closed 4 per cent up at Rs1,981.35 in Mumbai.

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