Infosys eyes US acquisitions; protectionism holding back customers

March 27th, 2009 - 8:13 pm ICT by IANS  

Washington, March 27 (IANS) Indian outsourcer Infosys Technologies Ltd. expects to find acquisition opportunities in the US during the downturn even as a rise in protectionist sentiment is holding back potential customers, it was reported here Friday.
“Acquisitions will definitely be very accessible in this market from a price point of view,” Nilekani co-chairman Nandan Nilekani told the Wall Street Journal in an interview. “If it makes sense, we’ll do it.”

Companies that operate in the healthcare and pharmaceuticals sectors might make particularly interesting targets, he was quoted as saying, adding that Infosys has $2 billion in cash and no debt.

Nilekani reiterated Infosys’s earlier guidance of about 12 percent revenue growth for the fiscal year ending March 31. That would be a sharp deceleration from growth of 35 percent, as measured by US accounting rules, in the year ended March 31, 2008.

Potential customers are holding back both because of the economic crisis and a rise in protectionist sentiment, Nilekani told the Journal. It’s also affecting customers’ decision-making about outsourcing.

The economic-stimulus bill, for example, includes a provision preventing participants in the US’s financial bailout programme from hiring workers with H-1B visas, which are commonly used by non-US outsourcing companies. “Political issues have become more pre-eminent in our conversations,” he was quoted as saying by the Journal.

Partly for that reason, he said he doesn’t know whether more US firms will lay off domestic workers and move more jobs to India, as International Business Machines Corp. plans to do, as reported by the Journal. The likelihood of other such moves depends in part on “political constraints,” Nilekani said.

Of the economic crisis, Nilekani said: “I’ve never seen this level of lack of clarity.” He said executives are “more focused on short-term tactical issues” than making bigger decisions about outsourcing.

In response, Nilekani told the journal Infosys is working with customers on alternative payment arrangements, including some that would link fees to business results. Other customers are asking to pay on a per-transaction basis, rather than a lump sum for a system.

Nilekani, who is in the US promoting his new book “Imagining India”, said he hopes to better diversify the geographic mix of Infosys’s revenue and reduce its dependence on the US. The US now accounts for about 63 percent of Infosys’s revenue. Nilekani said he would ideally like that to be about half.

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