Bangalore: The back-office outsourcing arm of Infosys Technologies, India’s No. 2 software firm, sees faster sales growth in the year ending March 2011, on rising demand from existing clients and new client additions, its chief said on Thursday.
However, wage hikes and competitive pricing pressures are likely to pressure net profit margins, which is seen at 20-22% compared with 22% a year earlier, D. Swaminathan, chief executive of Infosys BPO, told reporters.
Country’s outsourcers, including Infosys and Tata Consultancy, have been offering wage hikes to employees in an effort to counter rising attrition and on reviving demand.
Swaminathan, who is also the company’s managing director, forecast a 15-20% revenue growth for the fiscal year ending March 2011. Last year, its revenue rose 11% to $352 million.
“New service offerings — we are seeing some uptick there,” he said. “Essentially we are doing a little more of differentiated services for existing clients and (there are) new clients.”
The acquisition of US-based McCamish Systems last November would also help growth, he added.
The debt woes that has hit Europe, which contributes 35-40% of the company’s total revenue, was having a sentimental impact but has not hurt the company’s growth, the chief executive said.
“The crisis will cause temporary disruption,” Swaminathan had told Reuters on Wednesday. “I have not experienced any impact because of that as of today.”
Indian outsourcing firms have thrived by providing Western firms with services such as processing insurance claims, managing payrolls and customer support. The economic crisis in the US, the largest market for Indian outsourcing firms, had crimped the pace of growth of Indian outsourcers last year.
However, growth was now returning to banking and capital markets and the manufacturing sector, Swaminathan said.
Export revenue from business process outsourcing rose about 6 percent to $14.7 billion in the year ended March 2010, according to IT body National Association of Software and Service Companies. This is seen rising 15-16% in the year ending March 2011.
Infosys BPO, which was set up as a separate unit of Infosys in 2002 and employs about 16,400 people, plans to add a gross 8,000 staff in the fiscal ending March 2011, Swaminathan said.
The unit offers finance and accounting, human resource and legal services outsourcing.
In 2007, parent Infosys signed a $250 million outsourcing contract with Royal Philips Electronics and bought three of the Dutch firm’s back-office centres to expand its presence in fast-growing European markets.
Infosys BPO would continue to look for acquisitions in Europe, the Middle East and Africa, Swaminathan said, adding it would look to buy companies working on human resource outsourcing and sourcing and procurement services.