Biz sentiment in US better than Europe: Infosys

Executive Co-Chairman Kris Gopalakrishnan says discretionary spending is coming back in US and Europe

Business sentiment in the US is better than Europe on account of the dynamic nature of its economy, Infosys Executive Co-Chairman Kris Gopalakrishnan today said.

"They (US) have adjusted. I would say that they have recovered also to some extent. Growth rate has picked up to 2 to 2.5%. Whereas Europe is still trying to figure out solutions. The growth rate is close to zero at this point. So, the business sentiments in the US is better than Europe because it is a dynamic economy," Gopalakrishnan told reporters here on the sidelines of Confederation of Indian Industry event.

However, making investments in Europe was not a bad decision for Indian companies. "India is pro-actively investing in Europe. Europe is not bad for India. If I remember last quarter, Europe grew faster than the company average, I think 18-19 per cent," he said.

Gopalakrishnan added that discretionary spending is coming back in US and Europe, "besides we are winning deals in India."

On the financial services sector, he said a slew of new regulations will create more IT work associated at implementation level which may probably trigger a wave of investments.

Talking about the sentiments of IT clients in the midst of global slowdown, Gopalakrishnan said they are getting used to 'slow growth' period which will continue probably for next two to three years.

"I don't see global economy accelerating for the next two to three years. In this environment, the focus on efficiency cost will continue and some IT companies will invest for the future and will support discretionary spend which may be in smaller chunks," Gopalakrishnan said.

IT companies expect a period of muted growth and industry body NASSCOM had forecasted 11-14 per cent growth which is lower than last year, he said.

"So, the expectation is that the industry has to go through a period of slow growth," he said.

Gopalakrishnan said he was optimistic that the situation will improve and the growth rate will pick up.

Having completed the restructuring process, Infosys is seeing higher growth rate for many of its new initiatives, but they are on smaller base, he said. "The base will start having an impact on overall growth rate over a three to five year period," he added.