Posts Tagged ‘Infosys’

Homeland Security Investigates Indian Software Giant

April 23rd, 2012

Infosys, India’s No. 2 software services exporter, is under scrutiny from the U.S. Department of Homeland Security for likely errors in employer eligibility documents of its staff working in the United States, the company said in a statement.

The Department of Homeland Security (DHS) is reviewing the employer eligibility verifications on Form I-9, said Nasdaq-listed Infosys in an April 18 filing on the U.S. Securities and Exchange Commission (SEC).

“In connection with this review, we have been advised that the DHS has found errors in a significant percentage of our Forms I-9 that the Department has reviewed,” Infosys said in the SEC filing.

If the DHS concludes that the Forms I-9, used to verify the authorisation of employees to work in the U.S., contains errors it is likely to impose fines and penalties, the company said.

In January, Infosys said it was being investigated in Texas over its sponsorship and use of short-term U.S. business visas.

Jack Palmer, a company employee, has reportedly accused Infosys of misusing the B1 visas to send employees from India to the U.S., its largest export market. Infosys has denied the reports.

Infosys said it could not estimate any loss it might incur from “unfavourable outcomes” related to the ongoing investigation and review.

“In the event that any government undertakes any actions which limit any visa program that we utilize, or imposes sanctions, fines or penalties on us or our employees, this could materially and adversely affect our business and results of operations,” the company added.

Infosys, which reported its fiscal fourth quarter earnings on April 13, disappointed investors with weaker-than-expected revenue growth outlook for the fiscal year 2013 due to an uncertain global economy.

The news sent its shares plunging more than 12 percent in their biggest fall in nearly three years and wiped off more than $3 billion from the company’s market value.


Infy eyes shop floor for products push; agriculture is next

March 27th, 2012

A strategic shift is under way at Infosys, India’s second largest software exporter. The $7-billion firm, globally renowned for its IT services, is opening a whole new channel of doing business with its latest software product platforms, taking the first steps towards achieving what Infosys 3.0 set out to do – securing a third of its revenues from products. At present, Infosys derives only 5% revenues from products.

The new platform for emerging markets, TradeEdge, is probably where the rubber meets the road for Infosys. In India’s maze of kirana stores where computers are yet to break in, getting real-time analytics on goods sold could be a daunting experience. TradeEdge, which Infosys co-developed with an unidentified American FMCG giant to link up small stores and manage the distribution channel with call centres, is now used in seven emerging economies, including India. The software product is expected to be Infosys’s biggest calling card in the product space after the success of its banking software Finacle, launched more than a decade ago.

Infosys executive co-chairman Kris Gopalakrishnan told FE that product revenues will soon play a major role at Infosys. “There is no doubt that it is a big part of the future,” he said in a recent interaction.

In just a year, the firm has won 23 customers for new product platforms including e-commerce applications, digital marketing, talent management and sourcing. It recently launched a mobile wallet for phone transactions (Airtel Money) and is also looking to adapt Flypp, its mobile phone app store to the television app space.

Sanjay Purohit, senior vice-president and global head for products, platforms and solutions (PPS), Infosys, said: “Over 3-5 years, you will see more momentum coming out of this every quarter. We have just started thinking through what we should do in the agriculture space; that’s one focus area over time.”

The platforms clocked a contract value of $300 million during the December quarter. However, Purohit reckons the next 18-24 months will still be the foundation years as the PPS business gains momentum and credibility. “The market will then start understanding what we are trying to do,” he said.

The 12 new platforms and a suite of products will add to the company’s flagship banking product, Finacle, which earned $237 million revenues in the last three quarters. Finacle, a web-based core banking system launched in 2000, is currently operating in 150 banks across 75 countries. Infosys claims a marketshare of over 70% for Finacle in India where the product first created a base for itself before expanding its footprint into Asia Pacific and the company’s biggest markets such as the US and Europe.

Sanjeev Hota, senior IT analyst with brokerage firm Sharekhan says: “For Infosys, other than Finacle which is at a mature stage, other non-linear cloud-based products and platforms that they are working on will take sometime to actually transform into a major revenue source.” Hota points out that it is difficult to give a time frame, but expects to see a shift in revenue mix over the next 4 to 5 years. “It is the only way the company can differentiate itself.”

The revenue from the product and platform business is typically spread over a longer term and margins are often higher than services. The margins in licensing out products and platforms can be as high as 40-50% and it is much better than the company’s current margins of 30-32%,” says Hota.

For a company known to be cautious on acquisitions, Purohit says it is “looking like furious” for potential buyouts. “In the end, we don’t build everything. In many areas, there are some intelligent pieces of property you can either partner with someone or acquire if its a good fit,” he says.

It isn’t just Infosys which has been making strides into the products space for the past year or so. For instance, the country’s largest software services exporter TCS last year rolled out an end-to-end cloud computing product for small and medium business which it sees as a potential $1-billion opportunity in the next five years.


IT shares like TCS, Infosys up on weaker rupee

March 22nd, 2012

Shares in export-driven software services companies rose on Wednesday on hopes a weaker rupee would improve their profitability.

The rupee touched a two-week low on Wednesday weighed by heavy demand for dollars from oil importers, while negative shares raised foreign fund outflow concerns.. At 1:29 p.m, the rupee was at 50.61/62.

Indian IT services companies draw more than 50 per cent of their revenue from the United States.

Most of the IT companies have given revenue projection based on the rupee level of 51.25-51.50 against the dollar, said Kavita Vempalli, IT analyst, Nirmal Bang.

“This (the rupee’s movement) indicates that the IT companies are heading towards their target,” she said.

Robust earnings from Oracle, the world’s No. 3 software maker, also boosted sentiment, traders said. Oracle’s software sales rose 7 per cent from a year earlier to $2.4 billion in the third quarter.

Tata Consultancy Services gained 3.4 per cent and Infosys 1.26 per cent.


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