Infosys’ revenues from BT to shrink further

Cost-cutting, vendor consolidation at BT.

---

“We have a basket of clients and if someone falls, someone else grows. The important thing is to have a portfolio which would allow us to handle such transitions better.” – Mr V. Balakrishnan.

---

Vishwanath Kulkarni
Shamik Paul

Bangalore July 12 Infosys Technologies Ltd said revenue contribution from its largest client could come down further as British Telecom Plc looks to keep costs under control fighting a recession and consolidate its IT vendor base.

Revenues from BT have more than halved for Infosys over the past six quarters as the telecom firm has reduced volumes and also due to the adverse impact of cross currency movements. For the latest quarter, BT accounted for about 4.5 per cent of Infosys’ revenues as against a high of 10.3 per cent in quarter-ended March 2008.

“It (revenues from top client) could come down further,” said Mr V. Balakrishnan, Chief Financial Officer, Infosys. “We don’t know how the vendor consolidation exercise will shape up. Even if it comes down we do have other clients that will compensate,” Mr Balakrishnan added.

However, Mr Balakrishnan clarified that though the revenues from the top client fell below five per cent for the first time, it has not impacted Infosys’ growth significantly. “This implies that we have a basket of clients and if someone falls, someone else grows. The important thing is to have a portfolio which would allow us to handle such transitions better,” Mr Balakrishnan added.

Revenues from BT, which exceeded $300 million for the past 12 months, have now fallen to over $200 million on LTM (last twelve-month) basis. For the June quarter, BT contributed $50.49 million to Infosys’ total revenue of $1,122 million.

Sources said BT might manage certain jobs internally, which would have a dent on outsourcing. Another factor that could lead to work drying up was that the company might not need certain services from the IT vendors.

Despite the decline in BT contribution, earnings from the telecom vertical increased marginally for the June quarter to 16.9 per cent of the total revenues from 16.7 per cent in the March quarter. BT contributed some 5.7 per cent of total revenues in the March quarter.

3 large deals

Infosys won three large deals in the June quarter including one from Telstra, the Australian telecom firm. As part of its vendor consolidation exercise, Telstra chose to work with Infosys as one of its key partners to support its A$450-million contract for application, development and maintenance.