Infosys bets big on the country's private sector

Company plans to raise the contribution of Indian private sector to its revenue from about 15% to about 50% in two-three years

India’s second-largest information technology (IT) services company, has decided to focus on the private sector.

The company plans to raise the contribution of the Indian private sector to its revenue from about 15 per cent to about 50 per cent in two-three years.

“We are expecting some of the government’s spending decisions to either be delayed or deferred, ahead of the general elections next year. Besides, the economy is also slowing, which is impacting spending decisions. Keeping this in mind, we are now focusing a lot more on the private sector,” V Balakrishnan, member of the board and head of BPO, Finacle and India business unit at Infosys, told Business Standard.

LOOKING HOMEWARD

• Infosys plans to raise the contribution of the Indian private sector to its revenue from about 15 per cent to about 50 per cent in two-three years
• Infosys derives 80-85 per cent of its India revenue from the government sector
• The Centre’s expenditure on IT is expected to decline due to the weak domestic economy

“In the private sector, there are lot of initiatives in areas such as energy, manufacturing and financial services. RBI (Reserve Bank of India) is talking about issuing new bank licences; so, we can be a technology partner for some of the new banks,” he added.

In the past couple of years, growth in IT spending in India was largely driven by the government. Both central and state government departments were also aggressively embracing technology-modernisation projects in areas related to energy & utility, taxation and automation.

The sizes of many government projects were relatively big, as these typically looked at system integration (SI) partners which, apart from the outsourcing services, could also source the hardware component and develop software.

“If you look at major economies, typically, the initial spending happens from the government. But as the economy gets globalised more and more, the private sector comes into the picture. That is what is happening in India. In the next three-four years, you would see the private sector spend more money on IT than the government,” Balakrishnan said.

Infosys, which started focusing on the India market after launching a separate business unit in 2008, derives 80-85 per cent of its India revenue from the government sector. Currently, the company is engaged in about 20 central and state government projects. In the private sector, the company has eight-10 active clients, including Bharti Airtel, as well as a couple of large business conglomerates with interests in telecom, retail and manufacturing segments.

“If you look at most companies in India, these are getting more and more globalised and are investing a lot more outside. So, they are finding the need to invest in technology. Traditional manufacturing firms in the country that never looked at ERP (enterprise resources planning), today want to do large-scale ERP implementation,” said Balakrishnan.

For the quarter ended September this year, India accounted for 2.4 per cent of Infosys’s overall revenue of Rs 12,965 crore.