Infosys subsidiaries still not standing on their feet

The subsidiaries of Infosys Technologies are still in the investment stage, with two of the four units posting losses, though the company is hopeful of a turn around in a couple of quarters.

Of the four subsidiaries, the Australian operations reported revenues of $27.9 million (Rs 126 crore) with a net profit of $5.8 million (Rs 26 crore) for Q2. The consulting business reported revenues of $11.64 million (Rs 52 crore) with a loss of $3.27 million (Rs 14.7 crore), while the China operations reported revenues of $3.7 million (Rs 16.65 crore) with a loss of $1.3 million (Rs 5.85 crore). The BPO business posted revenues of Rs 157 crore with a net profit of Rs 22.6 crore.

At the Q2 results announcement here on Wednesday, group head (worldwide sales and customer delivery) SD Shibulal said the China operations have been bogged down by its global customers expressing serious concern over protection of intellectual patent in that country resulting in lower business. However, he said, the company has bagged a million-dollar deal in China and expects to see a turnaround in the next fiscal.

On consulting operations, Shibulal said it is in the investment mode and is expected to become profitable in the next two-three quarters and added 19 new clients in Q2.

On the impact of US slowdown, CEO Nandan Nilekani said it had done a dipstick survey of its customers and there was no evidence of any slowdown.

He said IT spend by companies is expected to remain flat, but the growing trend of globalisation of IT services will put it in an advantageous position. Infosys has got repeat business of 95% in Q2.

The Infosys CEO said the legacy giants (read IBM, Accenture) do not posing a threat to its business despite expanding their presence in India.

Infosys has also come out with a deferred bonus scheme for its senior management at the level of vice presidents. These bonuses will range from $20,000 (Rs 9 lakh) to $1.25 lakh (Rs 56 lakh) depending on the seniority. This bonus scheme is expected to benefit about 170 employees.

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