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Making the Right Moves

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VoicenData Bureau
New Update

Retaining its glory, the blue-chip company Infosys Technologies continued its

growth run in the telecom vertical. Infosys made Rs 3,600 crore from its telecom

business in FY 2007-08, a 25.52% growth over the Rs 2,681 crore in the previous

fiscal. This can be attributed to the geographical focus of the company, thrust

on several areas in the telecom vertical, and its ability to hedge against the

weakening US dollar.

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The increased thrust on telecom contributed 21% to the total revenue, way up

from the 15% in FY 2003. In fact, telecom is the only vertical where

contribution to the overall revenue has shot up substantially in the last five

years. Looking at the break-up: 45% of the telecom revenue came from

non-application development maintenance, IMS-testing, validation, and packaged

implementation, while the remaining 55% came from core application development.

Infosys invested Rs 9 crore in OnMobile Systems, a US-based company, and Rs 2

crore in M-Commerce Ventures, based out of Singapore. The company made major

changes in the top management effective June, 2007 with Nandan M Nilekani

assuming the role of the co-chairman of the Board, S Gopalakrishnan becoming the

chief executive officer and managing director, and SD Shibulal the COO.

Infosys 8

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Infosys, which has 52 global development centers, has also reorganized its

business units to anticipate changes in the global IT industry and differentiate

vis-à-vis its competitors.

As per the reshuffle, Infosys business units were realigned, forming six

vertical Industry Business Units and five Horizontal Business Units that cut

across all the vertical units. The European business has been divided into

industry verticals, which will be integrated within the proposed IBUs.

The restructuring helps Infosys broaden its customer base and strengthen its

current portfolio through scale benefits. The new opportunities will leverage

the strengths of the next generation of leaders at Infosys. The company also

increased the participation of younger leaders in making company strategies.

With this, the budding leaders below the age of 30 will be part of the

management council of the business units.

The company has increased its focus on growth markets. A new growth engines (NGE)

unit has been formed to expand businesses in Australia, China, Japan, the Middle

East, Canada, South and Latin America. It has also formed a separate business

unit to focus on India in order to tap the growing domestic market.

A whole revolution is taking place

with digital content management




Senior vice president and head of Communications Media and Entertainment

(CME) Business Unit, Infosys Technologies



Subhash B Dhar

Address: Infosys

Technologies, 44 Electronics City, Hosur Road, Bangalore 560100, India

Tel: +91-80-28520261 Fax:

+91-80-28520362

Website: www.infosys.com



Highlights
  • Garnered Rs 3,600

    crore from telecom business, a 25.52% growth
  • 45% of the telecom

    revenue came from non-ADM, and 55% from core application development
  • Restructured business
  • Media and

    entertainment will be a focus area
  • Strengthened its India

    presence
  • Vendor consolidation

    is a key challenge

What were the trends and main orders that

had impact on revenues coming from the telecom vertical during the last

fiscal?



The communications services provider segment, as opposed to the

equipment manufacturing sector, where we do R&D business as well,

contributed to the growth of the telecom revenues. A small portion of the

revenue came from the OEM business, and a majority from the communications

services provider business. And, in terms of services that we offer to our

clients, application development, enterprise solutions, packaged software

solutions and infrastructure management services, and BPO would be the top

contributors. In terms of geography, we have been relatively equally

distributed across the world: 45% in the US, 40% in Europe, and 15% in the

rest of the world.

Are you focusing on new markets, in terms

of geography, and also increasing focus in India?



We formed an India Business Unit six months ago. Over the last couple of

months we have been hiring people and putting together a small team. This

business unit is looking at all industries and not just telecom-an area of

interest-but it is too early to say what business and revenues we expect to

see from this unit.

What would be the focus area in India?



In the rest of the world my unit drives the demand, but in India we are

not driving the demand. We are taking care of the supply. The India Business

Unit will go and drive the demand. We see a lot of interest from the Indian

telecom industry as well for Infosys services.

What about significant trends in the

global telecom market?



Some of the trends continue from last year-large network transformations

from circuit switched to packet switched, something almost all large telecom

operators are going through, and there is a lot of demand for technology

equipment devices and applications.

The second is the explosion of devices thanks

to wireless and broadband. Both heavy growth areas are driving the demand

for devices such as handheld and set top devices.

The third trend is on the content side. Now

that pipes are getting ready and networks are built, telcos are thinking

about what to do. Unfortunately, content is not ready. Either it is not

digitized in tapes or not available for distribution in the digital

ecosystem. The whole digitization process has picked up across the world and

a whole revolution with digital content management is taking place.

Media and entertainment is a focus since the

latest reorganization.

What will be the impact of recession?



It is unlikely to affect the percentage of revenue from the telecom

vertical. As to how recession has impacted us from a decision-making

perspective, we are seeing that in the last few months decisions are

happening slower than before. More approvals are required for the same

decisions that took fewer approvals in the past. But we have not yet seen

any cancellation of projects, or indications that we will see fewer

projects. We have not seen any price reduction requests, so there is no need

to panic. There are some requests for extending the payment terms, but that

is coming from the credit squeeze situation.

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