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Last Updated: Wednesday, 11 October 2006, 12:25 GMT 13:25 UK
New clients boost Infosys profits
Infosys facilities in Bangalore
Infosys is looking to cut its reliance on the US market
Indian software giant Infosys has reported a 53% rise in second-quarter profits and raised its forecasts for the rest of the year.

Net profit for the three months to 30 September beat analysts' forecasts, hitting 9.29bn rupees ($203m; 110m).

Chief executive Nandan Nilekani said insurer Zurich Financial Services was one of 45 new clients.

Infosys is boosting its operations in Europe to reduce its dependence on the US, where it earns 60% of its revenues.

The Bangalore-based company, which is India's second-largest exporter of software, said it had hired an extra 10,795 people during the quarter and expected full-year sales to pass $3bn for the first time.

"Although we have recruited over 10,000 people, we have never diluted our intake quality," said chief financial officer V.Balakrishnan.

"We only select 1% of applicants."

Staff retention

Together with rivals Tata Consultancy Services and Wipro, Infosys is continuing to pick up more business from Western companies seeking to save money by outsourcing business processes.

India's National Association of Software and Service Companies (Nasscom) has estimated that contracts worth a combined $100bn will come up for grabs over the next two years.

Infosys office
The firm has received 1.4 million job applications within the last year

Mr Balakrishnan said the company was seeing particularly strong growth in the financial services, telecoms and energy sectors.

It was also seeing rising demand for its independent testing services, as companies become more rigorous in the way they roll out new computer systems and face greater regulatory and compliance issues.

The explosive growth in India's IT and outsourcing industries is giving companies like Infosys a staffing headache, with wage inflation at about 13% and employee turnover at 27% across the sector each year.

Mr Balakrishnan said that his company had a staff turnover of just under 12% and had managed to increase profit margins despite the effects of rising wage inflation.

"We are increasing the proportion of high-value work we do in areas like software implementation, testing and consulting, and managing to offshore more of the work to India, where costs are lower," he said.


SEE ALSO
Outsourcing demand boosts Infosys
12 Jul 06 |  Business
Profits rise at India's Infosys
12 Jul 05 |  Business

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