Wednesday, August 19, 2009

Infosys bids for over 10 govt deals

A man walks past a billboard of Infosys Technologies in Bangalore, October 10, 2003. Infosys, India's...

Infosys Technologies, India's second-largest IT services exporter, has bid for more than 10 large government projects in India as part of a drive to lower its dependence on the U.S. market, an official said.

Infosys, which gets more than half its business from the United States, plans to generate $1 billion in revenue from the Indian market in 2-3 years versus an insignificant level now, the head of its India business unit said.

"There are large opportunities in India. So we are definitely going to go after these kinds of businesses very aggressively in India," Binod Rangadore told Reuters in an interview. "We have a very healthy pipeline right now."

The market for technology and business outsourcing services in India is expected to expand five-fold by 2020 to $90 billion to $100 billion on the back of a growing economy, according to a recent study by lobby group NASSCOM and consultancy McKinsey.

Outsourcing firms such as Infosys and bigger rival Tata Consultancy Services are tapping new markets such as India, China, Japan and countries in Europe to beat a recession in the United States.

The Indian firms face competition from big global players such as IBM Inc, Hewlett-Packard, and Accenture that have raided their home turf as they look for growth outside their mature markets.

U.S. business software maker CA expects its bookings, an indicator of future business, will rise 50 percent in the year to March 2010 and by 30-40 percent for the following two years on growing technology spending.

Infosys, which set up its India business unit in late 2007 as part of a strategy to diversify its revenue base, has put in bids for IT services contracts from railways and state-run telecoms Bharat Sanchar Nigam Ltd (BSNL) among others, Rangadore said.

He declined to set a timeframe for the outcome of the bids.

The U.S. market had contributed 63.2 percent of Infosys's 2008/09 revenue of $4.4 billion, with just 1.3 percent coming from India.

Rangadore said the business from IT services in India was very small and bulk of the revenue in India came from Finacle, the banking solutions and services unit of Infosys.

WINDOW OF OPPORTUNITY

Last month, Infosys said it had won a contract to design, develop and support a portal for the ministry of commerce and industry. A government official said the contract was valued at 150 million rupees ($3 million) for three years.

Infosys, which has a market value of $23 billion, has also won a project from the tax authorities for a project to enable electronic filing by taxpayers, Rangadore said.

He said spending on technology by private companies was seeing a slowdown in India due to the economic downturn, but investment by the government remained robust and was likely to increase in the near term.

A host of IT services firms are expected to vie for the government's initiative to provide the country's more than 1 billion people with identity cards, a new project which is being headed by Infosys co-founder Nandan Nilekani.

"The window of opportunity in India is probably in the next one to two years when most of the decisions will be made for large spending in India," Rangadore said.

Shares in Infosys, which counts Goldman Sachs, BT Group, and Philips Electronics among its more than 550 global clients, ended down 1.1 percent at 1,950.70 rupees in the main market that fell 1.5 percent.

The Infosys stock has jumped about 75 percent this year, compared with a 54 percent rise in the main index.

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