INTERVIEW-UPDATE 1-Infosys banks on Europe, Asia to boost growth

Wed Oct 19, 2011 12:02pm BST

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* Europe's revenue share to double to 40 pct by end FY2014

* Starts 450-seat IT development centre in Singapore

(Adds comments)

By Harry Suhartono and Anshuman Daga

SINGAPORE, Oct 19 (Reuters) - India's No.2 software services exporter, Infosys (INFY.NS), aims to double the revenue share from Europe to 40 percent of its total sales by the end of its 2014 financial year, as cost-strapped global companies step up outsourcing.

The Bangalore-based company, a pioneer in India's $76 billion IT sector, has grown rapidly by employing thousands of engineers in low-cost Indian centres and catering to overseas firms, mainly based in the United States.

"Our target is by 2014, our business will be 40 percent from Americas, 40 percent from Europe and 20 percent from Asia," Ashok Vemuri, Head of Americas and member of the company's board told Reuters in an interview at Infosys' office in Singapore.

Vemuri heads Infosys' financial services and insurance business, which accounts for about a third of Infosys' revenue. The firm employs more than 140,000 staff and aims to add a total of 45,000 people globally this year.

Valued at nearly $32 billion, Infosys competes with top ranked Tata Consultancy Services (TCS.NS), Wipro (WIPR.NS) and global firms including IBM (IBM.N) and Accenture (ACN.N) for large It outsourcing deals.

Vemuri said companies in Europe were taking a longer time to decide on IT services contracts due to the eurozone debt worries, but the long-term outsourcing trend was intact.

"Today, unlike in the past, they are looking over their shoulder. They are saying, 'let me get one more approval from my boss. They want to throw this to the top of the house'".

Europe is the second-largest market for India's software firms, which have been looking to increase their sales to the region to hedge against their exposure to the United States that accounts for more than half their sales.

Infosys's revenue jumped nearly 20 percent to $3.4 billion in the six months ended September 30.

Vemuri said the company is still expanding in continental Europe.

"Amidst all this uncertainty and chaos, there are significant opportunities," said the former investment banker who joined Infosys in 1999.

Infosys earned 65.3 percent of its revenue in the second quarter from the United States versus 65.8 percent from a year ago, while Europe accounted for 20.5 percent of its revenue, down from 21.8 percent a year ago.

The firm, which counts Goldman Sachs (GS.N) and BT (BT.L) among its main clients, reported a 9.7 percent rise in quarterly profit last week, and cut its full-year sales outlook by less-than-expected, easing market worries of a sharp slowdown. [ID:nL3E7LC0N4]

ASIA'S TECH SPENDING TO JUMP

Vemuri was confident about the prospects for Infosys' main financial customers.

"There are no budget cuts, no project cuts," he said. "Most companies in the Fortune 500 are using technology to dig themselves out of the hole with increasing automation."

Infosys shares have fallen about 20 percent this year versus a 16 percent fall in the broader market index .NSEI.

Vemuri said Infosys sees Asia, which contributes around 12 percent of its revenue, as a region where the next big wave in technology spending will take place.

"We need to be in Asia because the next big wave of tech consumption of a very different type is going to happen in Asia," said Vemuri, who was in Singapore to officially launch its IT development centre in the city-state.

For now, the bulk of Infosys' business is from Australia and the company is making a big push to ramp up investments in Singapore and China.

Infosys' Singapore centre near the airport can seat up to 450 people and the company plans to boost this number to 1,000 by the end of 2012.

"Singapore is the hub and the central nodal point for us as we expand our business in Asia," Vemuri said.

In China, Infosys is investing $125-$150 million in a new campus. The project will be completed over 3 years and will have a capacity to seat 8,000 employees.

(Editing by Muralikumar Anantharaman)

((Harry.Suhartono@thomsonreuters.com)(+65 6403 5658)(Reuters Messaging: harry.suhartono.reuters.com@reuters.net)) Keywords: INFOSYS/

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