Infosys Consulting to break even in FY09

Infosys Consulting, the much-talked about business division that will make a pathway for India's foremost IT company into the think-tanks of global firms, is expected to break even during the current financial year, five years after it was incubated.

Infosys has invested more than $40 million (Rs 160 crore) in this arm, which has been bleeding. The subsidiary has posted a top-line of $68 million (Rs 270 crore) in fiscal 2007-08 and expects to touch the $75 million (Rs 300 crore) mark this fiscal.

Infosys Chief Financial Officer V Balakrishnan said that the consulting arm is indeed progressing well, and in addition to its arrow-head approach the down-stream business is also flowing in.

"For every $1 of consulting revenue we get anywhere between $3-5 revenues from downstream business over a period of time," said S Gopalakrishnan, CEO and MD, Infosys Technologies.

Infosys BPO, another of its subsidiaries, reported a strong 60 per cent growth y-o-y, to touch $235 million, and it is expected to grow 50 per cent during the current fiscal.

Infosys Finacle, the banking products business recorded a good 25 per cent topline growth to $125 million and it is expected that the momentum will continue.

Looking ahead, Gopalakrishnan said that at any given time the company is pursuing 12-15 large deals (more than $100 million or Rs 400 crore) which will take six to nine months to fructify. "We closed four such deals during the last quarter and the guidance does not factor these large deals."

Infosys said that 76 per cent of its large clients have indicated that their technology budgets will be flat, or trimmed down, going forward, in a turbulent global economy.

"We are witnessing global restructuring, top level changes. These will surely delay the decision-making process," Gopalakrishnan said.

Reacting to the Infosys results, Sudin Apte, senior analyst, Forrester Research, said, "Considering the present state of the global IT market, Infosys has managed to do well. Though the next two quarters will be testing times for most vendors, the IT market will witness strong demand from the third quarter of 2008-09 onwards."

In the HR area, Infosys plans to add 25,000 employees during the year, as against a little over 33,000 hired in FY08.

The company is expected to spend close to Rs 1,200 crore as capital expenditure during the year to set up SEZ infrastructure across Indian cities and building capabilities in emerging centres such as Latin America, Canada, West Asia and a few other geographies.