Bangalore: The outsourcing unit of Infosys Technologies Ltd expects revenue to rise 10% to 15% in the current fiscal year to March, but pricing remains a concern.
“Clients are under pressure anyway so they are putting pressure across the board,” Amitabh Chaudhry, chief executive of Infosys BPO Ltd, told Reuters in an interview on Tuesday.
Revenue at the wholly owned unit of India’s second-largest software services company grew by 26.4% to $316.2 million in 2008-09.
Chaudhry said the outsourcing business would remain uncertain for the next 12 to 18 months, as large Western clients curb non-essential technology spending in a sluggish economic environment.
“May be the pace of decline seems to have reduced a little bit,” he said. “But to say that the decline has stopped, things have stabilised and now the uptick has started I think in my mind would be a bit of an unfair assessment.”
However, Infosys BPO hopes to maintain profit margins in 2009-10 on increased orders from overseas markets and by cutting some operational costs.
India’s outsourcing firms have so far thrived by providing Western firms with services such as processing insurance claims, managing payrolls and customer support.
The boom in business process outsourcing, or BPO, is built on a large, skilled and cheap English-speaking workforce, but a global economic slowdown has crimped spending by companies.
Export revenue from BPO is estimated to have grown by 17.5% to $12.8 billion in 2008-09, according to the lobby group National Association of Software and Service Companies.
The sector accounted for 27% of India’s IT and back-office outsourcing services exports that is estimated to have risen to $47 billion in the last fiscal year.
Chaudhry said Infosys BPO’s growth this year would be helped by increased business momentum in the overseas markets, as the company looked to bolster its presence in newer areas such as Brazil and China.
Infosys BPO, whose offerings include finance and accounting, human resource and legal services outsourcing, plans to launch its operations in Brazil with a client in three to six months, he said. The centre will start with 25 to 100 people.
In China, the company plans to raise its headcount to 400-500 people in 2009-10 from about 200 now.
Infosys BPO, which was set up as a separate unit of Infosys in 2002, is focusing on buying outsourcing firms in the United States and Europe, Chaudhry said, adding the size of any deal would be between $30 million and $150 million.
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.
Shares in Infosys, which got nearly 7% of its revenue from the BPO unit in the last financial year, were trading up 3.2% at Rs1,788 at 0623 GMT in a Mumbai market that was 1.8% higher.