Turbulent times in US, but Infy is in comfort zone

With the ongoing uncertainty over IT spending by clients in the US, the fact that Infosys has a significant cash pile over $2 billion in cash and cash equivalents becomes extremely important and gives it confidence, said Infosys MD & CEO S Gopalakrishnan.

While clients’ IT budgets remain the same or go up slightly from previous years, there is an unwillingness to spend the money, which could lead to a quarter or two of slow growth, he said.

We are in close contact with our customers and trying to get more clarity on how they plan to spend their budgets.

While the IT budgets are closed, there is some hesitation when it comes to discretionary spends and new projects. When it comes to maintenance and support, it’s business as usual,” said Mr Gopalakrishnan.

With a sizeable cash pile, the market expects Infosys to either buy companies or return some of it to shareholders through dividends. Mr Gopalakrishnan insisted that cash is extremely important. “In a high-risk, technology business like ours, we must have sufficient cash. In times when there is concern about the US economy, cash gives you a lot of confidence, he said.

While Infosys has identified India, China, Australia and Japan as among its key emerging markets, verticals like utilities, healthcare and pharma are where it aims to increase its presence.

We look at acquisitions as a way to accelerate entry into some of these areas (markets and verticals). We want to acquire if we find the right company at the right valuation which is willing to be acquired, he added.

While 30-40% of its hiring requirements for the next fiscal have already been met through campus recruitment, Infosys can adjust its hiring from the market, if need be, Mr Gopalakrishnan said, adding it will decide in April its people requirement for fiscal 2008-09.

Salary hikes for Infosys employees will continue to be in the 13-15% range as last year. The shortage of people is not going away.