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Infosys US unit ramps up hiring, investment

Infosys US unit ramps up hiring, investment
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First Published: Mon, Jul 18 2011. 10 28 PM IST
Updated: Mon, Jul 18 2011. 10 28 PM IST
Bangalore: Infosys Public Services (IPS), an Infosys Ltdsubsidiary incorporated in the US and focused on federal and state government work in the US, the UK and Canada, is ramping up local hiring and investments to boost growth.
The company is looking to hire about 800 people this fiscal year, including around 300 for its development centre in Texas, IPS chief executive Eric Paternoster said. The centre has already hired about 200 people in the past few quarters.
The bulk of Bangalore-headquartered Infosys’ revenue comes from the US corporate world. US government spending on information technology (IT) presents a neglected but addressable market for the firm.
Currently, only 2-3% of North American revenue for Infosys comes from direct or indirect work for the US government, Paternoster said. For the June quarter, 64% of Infosys’ $1.6 billion (Rs7,136 crore) revenue came from the US.
“Government spending accounts for a third of all IT spending worldwide,” Paternoster said in a phone interview from the US on Monday. “While we have been doing work for the government, it has been in an ad-hoc, non-focused manner.”
Infosys set up the subsidiary in October 2009, training an eye specifically on this market.
US revenue for Infosys grew 5.1% in the June quarter over the preceding three months. “From a small base, we expect to grow much faster than the group overall,” Paternoster said.
The theoretical addressable market for Infosys in the US government sector is about $2 billion, he estimated. “Of that, there is a $500 million space which we can focus on.”
Overall tech spending by the US government on the traditional application, development and maintenance (ADM) space is estimated at about $21 billion. Spending on infrastructure management services (IMS) is projected at another $12 billion, and on consulting, $5 billion.
One-third of this spending is done by the defence, security, intelligence and justice departments—areas Infosys is not targeting. Instead, IPS will focus on deals related to civilian technologies. While there are opportunities in the US healthcare sector, IPS is also looking at the IMS space around cloud, virtualization and data centre consolidation, Paternoster said.
IPS made a net loss of $80,000 in the June quarter, which Paternoster attributed to investments the subsidiary has made in anticipation of growth.
Currently, about 2,270 Infosys employees work under IPS in the US, the UK and Canada.
Paternoster said while many government agencies seek on-site work to preserve US jobs, he expects cost pressures to push many of them to consider the offshoring model as well. He sees an equal mix of onshore and offshore deals for IPS eventually in terms of revenue.
sridhar.c@livemint.com
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First Published: Mon, Jul 18 2011. 10 28 PM IST