Infosys Technologies Will Sustain Operating Margins Despite Pricing Pressure

Infosys Technologies Ltd, India's software services vendor, expects most clients to have their technology budgets in place by mid February. Despite deep recession in the market Infosys is sure to overcome pricing pressure. This year company expects customers to be

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Infosys Technologies Ltd, India’s software services vendor, expects most clients to have their technology budgets in place by mid-February. Despite deep recession in the market Infosys is sure to overcome pricing pressure.

This year company expects customers to be cautious in their technology spending. Traditionally, Western clients finalise their annual technology plan in January, but the financial turmoil caused some delays in budget constructions.

Infosys has projected revenue to grow slower by 13% this fiscal from 35% growth it posted in the year ended March. Still, the company, which reported a 33% rise in net profit to Rs1,641 crore for the third quarter, has outperformed significant peers in the technology arena.

“In fact, it looks like the second wave of challenges are becoming visible at this point, with some of the financial institutions announcing their results in the last three to four days,” says S. Gopalakrishnan, chief executive officer, Infosys.

“There is concern that now we are starting to see the impact of the economic slowdown in the real (US) economy, with mortgage defaults increasing, and credit card payments getting defaulted”.

“Customers are also telling us that even if there are budgets, the decisions regarding actual spending could be slow due to concerns of the economy. There is a pricing pressure, but we are saying that we are able to manage that and protect our margins.”

L.D.

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