Breakeven of Infosys Consulting deferred

Infosys on Friday said that the breakeven of its consulting arm is expected by the end of the present fiscal as it starts to get some decent topline. This is the second time that Infosys is postponing the announcement of its break-even.

The consulting arm, for FY2006, posted a topline of $32 million as against $4.8 million for FY05 and the breakeven was earlier expected during Q4FY06. It had a topline of $10 million during Q3FY06.

As a percentage of revenue, consulting contributed 3.5 per cent for the year-ended March 31, as against a contribution of 3.6 per cent for FY2005.

For the quarter-ended March 31, 2006, consulting contributed 3.2 per cent of the topline as against a contribution of 3.1 per cent during Q3FY06. For the fourth quarter-ended March 31, 2005, the contribution was 4.1 per cent.

Said Kris Gopalakrishnan, COO, Infosys: "We are seeing good traction in the consulting business. We are investing aggressively in this business and we should turn the corner by end of the present fiscal. One aspect we will have to keep in mind in the consulting business is the fact that it is transaction-oriented and not annuity-based."

He added that consulting is being increasingly honed as an arrowhead for the company to break into new accounts.

"Infosys Consulting has almost met its goals and we have 180 people in this arm and we continue to hire highly experienced people for this team," Gopalakrishnan said.

He further added that Infosys had a 0.7 per cent increase in employee cost than required as it has built up an employee strength keeping in mind the flow of work.

The company also said that there is likely to be a small impact on the Q1FY07 numbers as an wage increase will be effected soon.

"The offshore employees will be given a wage hike of 14-16 per cent, while the onsite employees will get a 3 per cent hike," he added.

Infosys added that it had commenced a consulting engagement on customer data integration for a hi-tech company and had developed a scalable, high performance systems for a global software vendor in line with its product licensing and pricing strategy.