Infy lines up Rs 6,000 cr deals in 10 months

India's second largest IT services provider, Infosys, expects to close 15 big deals over the next 10 months, each worth $100 million or more.

The company hopes to finalise many other deals during the same period with the average size of each in the region of $10-15 million, according to S Gopalakrishnan, CEO and managing director.

"We expect fewer multi-year billion-dollar deals in the future," he said.

The company is also open to acquisitions "if a match is found", he said. The company, with a cash reserve of Rs 7,319 crore as on September 30, has set aside around $500 million for acquisitions. The company has identified three to five potential acquisition targets, including one consulting firm.

When compared to other Indian IT companies such as TCS and Wipro, mergers and acquisitions has not been Infosys' forte. In July, the company bought the finance and accounts BPO centres of Royal Philips Electronics for Rs 110 crore.

It also won a $250 million contract from Philips in the process. Prior to that, Infosys had acquired Expert Information Services in Australia for around Rs 104 crore ($22.9 million) in 2003.

The company's acquisition strategy is focused on filling in gaps in the outsourcing space. "Our acquisitions need to provide new platforms for Infosys to base its business on or open new markets.

The company is cautious in selecting target companies, looking not only for strategic fits but also the overlap of ability to retain employees and align values, culture and ethics," said Gopalakrishnan, who added that Infosys did not support hostile takeovers.

The company has reportedly won clients and contracts at 3-4 per cent higher rates, and contract renegotiations are 2-3 per cent above average. Its top 10 customers grew by 2.7 per cent quarter-on-quarter and the non-top 10 grew 13.7 per cent sequentially.

" Since we plan projects on a basis of 30 per cent onshore and 70 per cent offshore, this indicates more offshore reliance to control cost compared with a previous 40:60 split. Also, the management has increased attention on increasing productivity in the last year with a current fixed price now being higher than the average margin by 3-4 per cent," he said.

"I do see our revenues from India crossing 5 per cent in the next couple of years but for India to become a larger market, we would have to wait," added Gopalakrishnan.