This financial year should see a 3-4% increase in billing rates from the new clients who are supposed to make about 5% of revenues.Some of the existing clients have also increased the rates but the broader picture is still coming out
Over the long run pricing is expected to improve. Infosys in the NASDAQ 100 by November 2006 would neither help pricing nor fundamentals but create significant demand for the ADR’s because there are funds who invest only in the NASDAQ stocks. A small PE Rerating could therefore be expected once that is done.
The biggest challenge facing IT firms is the scaling up of operations from these levels the hiring, training and retaining manpower will be the key challenge for the industry. In about 3 years Infy will be managing more then 100,000 employees and that would take some doing. Infosys says it spends US$100m per year on training, and is increasing its training capacity in Mysore from the current 4,500 to 13,500 by year end.
China is not a threat to the Indian IT sector. The wages in China are 20% higher than that to India. Moreover the project management skills are even below that to what is available here.
It is being estimated that Europe and within that, England will grow much faster than US. Europe is growing at 55-60% annually.
But integration in continental Europe and Japan yet to hit full rhythm, This year Progeon should do $ 130m in revenues, over $85m last year.
Infosys is expanding its bouquet of services so that it could outperform the industry growth rates.
In last 5 years, Infosys has grown revenues at a 38% CAGR, compared to slightly less then 30% for the industry.
I am told that Infosys and probably TCS have offices in the same building in Hungry. These software giants are aggressively looking at newer markets for growth.
Source: Company Presentation at CLSA meet.
Edited by basant - 30/Sep/2006 at 11:49am
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