Income Tax dept moves SC against Infosys

NEW DELHI: The Income Tax department on Monday moved the Supreme Court challenging the Karnataka High Court order holding that IT major Infosys Technologies was not liable to deduct tax at source on employees stock option plan.

A bench of Justice S H Kapadia tagged the matter with another similar petition pending before it.

According to the department, the high court, which upheld the Income Tax Appellate Tribunal's order, was wrong in holding that Infosys was not liable to deduct TDS on the stock option plan extended to its employees.

It has sought the apex court's directions as to whether a stock option scheme, which had been exempted since 2000 onward can be treated as having exempted even in earlier assessment year of 1999-2000.

According to petition, stock option provided a benefit as the shares were allotted at a reduced rate to the employees. "It is nothing but a concession or benefit granted to an employee and would certainly amount to perquisite to an employee...", it added.

The ITAT had rejected the department's contention that Section 17(2)(iiia) of the Income Tax Act was classificatory in nature and not applicable to the assessment years.

It further held Infosys cannot be treated as a defaulter not deducting TDS under Section 192 of the Act in regard to issue of shares to its employees at a concessional rate as the same could not be treated as perquisite (salary).

Infosys had formulated Employees Stock Option Plan in 1999 under which shares were transferred to a trust which would in turn transfer shares to respective employees.

The company had challenged department's show cause notice proposing to treat it as defaulter for failing to deduct TDS in shares issued to its employees.

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Infosys looking to make first UK acquisition

Indian IT services firm Infosys Technologies is considering making its first acquisition in Britain, as part of a strategy designed to deepen its global footprint.

Dalian WEF is winning a place on world map

BG Srinivas, who heads Infosys's operations in EMEA (Europe, Middle East and Africa), said the company was on the lookout for deals in its key European markets.

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"We are looking for opportunities that will transform our business in Europe," he said. "That could be in the UK, France or Germany." He declined to comment on whether any talks had been held with potential targets.

Mr Srinivas was speaking during a visit to the coastal city of Dalian in north-eastern China to coincide with the World Economic Forum summit.

Last week, Infosys, India's second-biggest computer services firm, announced the launch of the UK element of its graduate employment scheme, which will involve 25 graduates spending four months in the city of Mysore in India, before returning as 'Infoscions' to work in the company's UK operations.

The IT services industry is the most sought-after employment sector among Indian graduates, with fierce competition for jobs with Infosys and its competitors, which include Tata Consultancy Services and Wipro Technologies. Last year, Infosys, which has been grappling with the impact of the strong rupee on its earnings outlook, had 1.3m applications for its annual recruitment programme.

Infosys has been engaging in efforts to improve the image of the company, and the outsourcing industry, in the UK, where there has been a fierce debate on customer service levels, and the implications for British jobs.

Mr Srinivas said the company was involved in initiatives to improve UK computer literacy, as well as projects to lower the skills deficit affecting people entering the workforce.

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Nagawara Ramarao Narayana Murthy

Nagawara Ramarao Narayana Murthy is N R Narayana Murthy

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"Infosys was christened at Shivaji Park"

MUMBAI: Shivaji Park, the sprawling ground in central Mumbai, associated with political rallies and cricket matches, has an IT connection as well -- software giant Infosys was christened here.

This was disclosed by Sudha Murthy, wife of Infosys founder Narayan Murthy, at a function here last night.

"We decided to name our new company as Infosys while sitting at a corner of Shivaji Park," she told the audience at a function after the couple were presented the Yashwantrao Chavan Award for 2006.

Recalling the time spent in Mumbai, she said, "We have nice memories of our stay in both Mumbai and Pune."

"In Pune, we frequented the cinema halls so much that even the doormen there began to recognise us," she said, drawing peals of laughter from the audience and a shy grin from Narayan Murthy.

"Although I hail from Karnataka, I feel I also belong here," she said citing the example of Lord Krishna, "who belonged to both Devki and Yashod".

She took a dig at Union Agriculture Minister Sharad Pawar, who presented the award, saying, "I thank you for presenting us separate shawls. Had this function been in Pune, I am sure we would have got a common shawl," apparently referring to the "calculative" trait associated with that city.

Responding in a lighter vein, Pawar said, "We are from Pune rural," implying the trait that she referred to was mainly an urban one. Murthy said she was indebted to readers in Maharashtra for their interest in translated copies of her books.

"In fact, my publisher tells me that the Marathi translations have sold more copies than the original version."

Sudha Murthy said she and her husband were "proud of our middle class origins". "Even now, we retain the same values. Money and values are different things," she added.

Recalling that Rs 10,000 contribution from her had helped launch Infosys, she said, "I am a good investor. See, what my Rs 10,000 has become today."

Pawar said if Murthy was known world over for leading India's IT revolution, it was Sudha Murthy, who had conquered the audience with her speech.

"While listening to her, I felt as if M S Dhoni was batting and hitting strokes everywhere," the BCCI president said.

Rajasthan Governor Pratibha Patil and Justice Y V Chandrachud, chairman of the award selection jury, were also present at the function  

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Ukraine-based Nadra Bank Implements Finacle Universal Banking Solution

MUMBAI: IT major Infosys Technologies on Monday said Ukraine-based Nadra Bank has selected its flagship product 'Finacle Universal Banking Solution' to power its transformation initiative.

Finacle encompasses core banking, Customer Relationship Management (CRM), treasury, e-banking and would replace the bank's current in-house decentralised system, Infosys said in a filing to the Bombay Stock Exchange.

"This win is of strategic importance to us. With an already established and fast growing client base for Finacle in Russia and CIS, the region is strategic to our growth plans," Infosys Technologies VP and Head (Worldwide Sales- Finacle) Sanat Rao said.

The implementation would leverage global practices and would play a pivotal role in helping the Ukrainian bank streamline operational efficiencies, the company said.

Finacle customer base spans across 55 countries and was recently recognised by top analysts including Gartner, Forrester and Celent.

Shares of Infosys closed at Rs 1,871.50, down 1.96 per cent, on the BSE in late afternoon trade.

Infosys, Wipro said to be eyeing analytics firm

Indian offshore giant Infosys and Wipro are reportedly both gunning for MarketRX, a US-based provider of analytics services for the pharmaceutical and biotech industries, according to a report in the Economic Times, an Indian paper.

Analytics has attracted a lot of attention from outsourcers recently as a higher value service to tack on to their existing offerings. Much of the work in this area is around marketing analytics - tools and services to help companies better understand and devise customer strategies.

Some Indian vendors have built up their own analytics business, and others have acquired analytics vendors in recent years. WNS, for example, earlier this year bought Marketics in a deal worth up to $65m. And last year fellow BPO provider EXLService bought Inductis, another analytics provider.

But with Infosys and Wipro now eyeing this space, it's no longer just the BPO specialists looking to get serious about analytics. The market for analytics is young but clearly poised for growth. And companies seem willing to pay dearly for access to this market. The Economic Times said MarketRX could fetch a price between $150m and $160m, some five times its annual revenue.

Got a question for Narayana Murthy?

Chief Mentor of Infosys and IT icon N R Narayana Murthy will be the Guest Editor at Economictimes.com on Monday, September 10.

Apart from handpicking articles for display, he will be available on chat between 1815 hrs IST (1245 hrs GMT) and 1945 hrs IST (1415 hrs GMT) that day to interact live and exclusively with our readers. Be sure to log on and chat one on one with Mr Murthy.

If for some reason, however, you are unable to chat with him, but would still like to pose a question, send it in here .

It could be a personal career question, a general question or perhaps something you always wanted to know about Narayana Murthy but didn't know who to ask. Mr Murthy will answer selected questions and we will feature them on Economictimes.com.

Infosys, Wipro chase same co for first time

BANGALORE: India’s tech posterboys and cross-town rivals Infosys Technologies and Wipro have shown interest in buying out the US-based high-end analytics company MarketRx. The indicative valuation of MarketRx is seen between $150 million and $160 million (Rs 615-650 crore), sources said.

This is probably the first time the Bangalore-headquartered Infosys and Wipro are seen chasing the same company for a possible acquisition. MatrixRx’s $160-million valuation is five times its revenue, the sources added. It is believed that the promoter expectation is “slightly north of this valuation”.

It is learnt that four-five suitors have expressed interest in MarketRx after the company mandated William Blair & Company in the US and Avendus in India to explore options, which could lead to a possible sellout. “The promoters are exploring various options regarding the future and will take an appropriate decision. The process is on,” said a source familiar with the developments.

For software services biggies like Wipro and Infosys, the acquisition will give a headstart in the analytics segment of the knowledge process outsourcing (KPO) segment, as it takes considerable time to build one’s practice organically in this business. According to industry sources, it will take a minimum two years for any BPO to have a credible presence in the analytics space.

with people coming from diverse backgrounds such as mathematics, statistics and chartered accountancy.
Industry observers said analytics services bring in higher revenue per employee compared to conventional IT services. The rates of analytics services range between $30 and $60 per hour while some high-skilled statistical modeling processes attract up to $150 per hour.

Wipro has been focusing on inorganic growth, with its now famous string of pearls strategy. Infosys, on the other hand, is getting aggressive on the M&A front. A target like MarketRx provides the BPO arms of both Wipro and Infosys a platform to get into transformational business deals. Unconfirmed reports suggested that BPO major WNS could be also in the fray, but ET independently learns that the Gurgaon-based company is unlikely to join the race. Early this year, WNS acquired another analytics firm Marketics for $65 million, valuing it almost 10 times its annual revenue. The names of the other likely contenders could not be ascertained, but sources said so far private equity firms have not shown any interest. An email query to MarketRx did not elicit response, while Infosys and Wipro declined to comment on speculative reports. MarketRx was started in 2000. It has over 350 employees spread across the US, Europe and India. Its list of investors include the US-based venture fund Sequoia Capital. The India operations were started with the Gurgoan centre in 2003 and supports the US teams on collaborative projects besides servicing European and Asia-Pacific clients. MarketRx has more than 75 small and big pharma, biotechnology and medical devices companies as its clients. Third-party analytics is growing steadily in India with more players entering the space, but currently it being dominated by captive units of MNCs, especially the financial powerhouses. The likes of HSBC, Standard Chartered, Lehman Brothers, Deutsche Bank, Fidelity, Bank of America have their captive centres in India which do high-end analytics work.

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Narayana Murthy on India, IT and entrepreneurship

Narayana Murthy on India, IT and entrepreneurship August 29, 2007 N R Narayana Murthy, chief mentor and chairman of India's IT major Infosys Technologies, is one of the world's most admired entrepreneurs. Hence when he came to Mumbai to speak on entrpreneurship, one could not help attending the event. Here are a few gems from the IT czar's mind: Never before in the last 1,000 years did India receive so much attention as it has been receiving in the last 10 years. Never before in the last 50 years post independence, urban India has hogged as much limelight as it is doing now. However, in this regard, one must admit that the progress has not been that great in rural India. Indian villages have not gone as far as we had wanted them to be. My wife Sudha spends a lot of time in rural India (Infosys Foundation trustee) and she tells me that television has a tremendous influence in shaping rural Indian minds. It is because of the television that there is a much greater awareness of how things should be. Accountability of government has increased hugely, thanks to some responsible journalists and television anchors. This is the time when we must consolidate our gains and build a solid future. It's a daunting challenge no doubt which the entrepreneurs of this country must brave. Never before in the last 1,000 years did India receive so much attention as it has been receiving in the last 10 years, says N R Narayana Murthy.

'Leadership is about making people say: I can do anything for you' August 29, 2007 I was a staunch Leftist in my college days and also when I was working in France. However, my experiences convinced me that Mahatma Gandhi's theory on entrepreneurship and growth is the best. As Mahatma Gandhi said, 'We must become the change we want to see in the world.' What an entrepreneurship needs is a strong leader who has to prove his or her belief in sacrifice and hard work. This gesture will in turn enthuse other team members to make bigger sacrifices. A leader is an agent of change, and progress is made when that change is effected. Entrepreneurship is all about raising the aspirations of followers and enthusing people with a desire to reach for the stars. To today's entrepreneurs, I have to say: 'follow in the footsteps of Mahatma Gandhi. For, it is he who created a vision for independence in India and raised the aspirations of our people'. Leadership has to be absolute. Leadership is about making people say, 'I can do anything for you.' A leader has to raise the confidence of followers. He should make them understand that tough times are part of life and that they will come out better at the end of it. He has to sustain their hope, and their energy levels to handle the difficult days. The leader has to create an environment where each person feels secure enough to be able to disclose his or her mistakes, and resolves to improve. Leaders have to walk the talk and demonstrate their commitment to a value system. N R Narayana Murthy

Infosys tries to lower dependence on U.S. deals

Indian outsourcing giant Infosys Technologies is working to decrease its dependence on U.S. customers through faster growth in other markets, its chief executive said Wednesday.

"From a geography perspective, Europe seems to be positive, Australia is also positive," S. Gopalakrishnan said.

This is partly because Infosys is investing in those markets and also because these regions are catching up with the United States in outsourcing work.

"They have suddenly woken up to the fact they need to become more aggressive in leveraging this globalization phenomena," Gopalakrishnan said.

Gopalakrishnan added that although the business environment is currently more positive in Europe than the United States, U.S. clients are saying they will increase their offshoring if the U.S. economy slows down.

"We're not seeing any slowdown in terms of deals from the U.S. yet, but we have to wait and see," he said.

About 60 percent of the company's revenue comes from the United States, while Europe's contribution is 26 percent and growing rapidly. Nasdaq-listed Infosys would like to see 50 percent of its revenue coming from the United States, 30 percent from Europe and 20 percent from the rest of the world, although this is not a time-bound target.

"We are close to that, but not there yet. There are no target dates," Gopalakrishnan said.

Infosys, India's second-largest software services exporter, could raise billing rates by 3 to 4 percent for new contracts and 2 to 3 percent for existing contracts, Gopalakrishnan added.

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