Bangalore: Infosys Technologies Ltd, India’s second largest software services exporter, says revenue from its top client, British Telecommunications Plc (BT), appears to have stabilized after a year during which the UK firm restructured its outsourcing contracts with most vendors.
Bangalore-based Infosys earned 4.5% of its revenue in the quarter ended December from BT, among the largest outsourcers to Indian software services firms, down from the 6.9% contribution to its revenue in March last year. In the December quarter, Infosys earned revenue of Rs5,741 crore.
“It has stabilized. We don’t see any issues on that account,” said V. Balakrishnan, chief financial officer, Infosys.
BT brought down its supplier base, renegotiated contracts and rates with both Indian software firms such as Infosys, Tata Consultancy Services Ltd and Tech Mahindra Ltd, as well as European vendors by offering them more work by volume, as it restructured its own business in the UK amid an economic downturn in 2009, according to analysts.
“BT has renegotiated most of their contracts in the last three quarters with their vendors, not just Indian companies...but also some of the European vendors where they have rationalized costs,” said Shashi Bhushan, senior research analyst at Prabhudas Lilladher Pvt. Ltd, a Mumbai brokerage.
“(Though) the volume is more or less assured, it is not going to increase in a quarter or two. Until there is a good demand pickup and UK sees a recovery, we don’t see any sort of positive commentary on BT as a client, from any Indian IT services vendor,” he added. For Tech Mahindra, in which BT is an investor, the UK telecom firm is also its largest client. Tech Mahindra in April last year bought Satyam Computer Services Ltd and has rebranded itself Mahindra Satyam.
Infosys sees business from the banking, financial services and insurance or BFSI and telecom business segments growing, led by demand from the US, the main market for Indian firms, said Balakrishnan.
BFSI contributed around a quarter of its revenue, while telecom contributed 16.2% for Infosys in the three months to December.
Infosys has seen some customers finalize their budgets for the year, but this would not indicate ability to spend the money allocated for technology work. “We are working with customers, collecting data... We are talking to each client, understanding their budgets... We are in that process,” Balakrishnan said.