Infosys grows income

The Indian IT services sector continues to show remarkable growth, with Infosys the latest to post strong results.

The company reported second quarter sales growth of 42 per cent and half-year growth of 40 per cent on the back of strong European performance.

It continues a trend among Indian outsourcing firms with Wipro and Tata Consultancy Services (TCS) posting 37 and 42 per cent growth, respectively.

Indian IT trade association Nasscom says 2005 was the coming of age for Indian IT multinationals, with many gaining a presence in new locations through cross-border acquisitions.

This was complemented by the company’s expansion into higher value, more complex outsourced activities.

Ovum analyst Samad Masood says Infosys’ results were boosted by European growth of 54 per cent, increases in package implementation and application development services and an upward trend in pricing.

‘But it is feeling the pain of the country’s infrastructure limitations,’ he said. ‘In a TV interview, an Infosys executive complained that bureaucracy is holding back infrastructure development.’

But Masood says reduced visa costs, rupee depreciation and economies of scale all helped margins from back-pedalling.

Infosys’ operating income rose 45 per cent to $211m (£113.6m) for the quarter and 37 per cent to $381m (£205.2m) for the half year.

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Further reading

Zurich retires legacy IT to support growth

Indian IT services reap benefits

UK drives further outsourcing growth