Infosys's domestic revenues growing faster than overseas biz

Unperturbed by the recent rupee pain, Infy’s India business head, C N Raghupathi is confident that India will grow faster.

Updated: Sep 06, 2013, 16:39 PM IST

There may be questions swirling around Infosys’s (Infy) global operations, given the spate of recent exits and deepening economic headwinds. But its domestic business is unscathed. Or so Infy’s India business head, C N Raghupathi, would have us believe.

“On the domestic front, IT is so underinvested that for Infy it’s actually growing much ahead of the overall business. This was the same situation that had happened to the US in 2000. Thus, for Infy, while the overall growth was around 5% last year, the domestic business grew 25%. This year, too, while Infy has projected an 8% growth for FY14, India business is expected to grow 30-40%,” he said. Interestingly, Nasscom pegged the domestic IT sector growth at 13-15% in 2013-14.

Unperturbed by the recent rupee pain, Raghupathi is confident that India will grow faster than more mature, global markets for IT, on the back of consistent and growing client contracts. In fact, last year, 2.5% of Infy’s APAC revenues came from India, the fastest growing country in the region.

And the growth engine is expected to be fuelled by relatively nascent verticals for IT like the government and private sectors. “India is suffering from a serious lack of productivity that is hampering its growth potential. Using IT extensively across industries can help change this,” he said.

Thus, while government spending on IT makes up 60-75% of Infy’s domestic revenues, this is set to increase exponentially going forward, Raghupathi believes. “The supposed slowdown in government projects is only in the central government which is spending cautiously due to elections being nigh. However, the state governments more than make up for this, as they are now investing in IT projects like e-governance, income tax, TDS and more in a big way,” he added, to buttress his point. “Besides, there is already a 2-3 years of overhang in existing multi-year projects in India. Using an outcome-based model further aids in improving domestic profitability for Infy.”

Raghupathi is clear the private sector holds promise on the back of verticals like energy, telecom, utilities, retail and education. Thus, from the 25-30% it currently contributes to Infy’s India revenues, Raghupathi hopes that in the next couple of years, the contribution would move up to 50%.

“In the telecom business, we are increasingly witnessing a renewal of contracts with voice power dwindling, and IT being used more for data routing to push data growth for telcos. An example of such a partnership is Airtel Money,” he said.

DNA/ Beryl Menezes