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Indias second largest software company, Infosys Technologies, on Friday announced a reorganization that would enable it to separately tap a strengthening domestic outsourcing market, along with emerging market regions like Australia, China, Japan and the Middle East.Bangalore based Infosys Technologies has formed two arms, the New Growth Engines unit that will also look at Canada, South America and Latin America, and an India focused arm.
We are growing rapidly, and this is a move to focus on new growth regions and accelerate our progress in verticals like media and entertainment, said Infosys Chief Executive S. Gopalakrishnan. The last time Bangalore based Infosys did such restructuring was in November 2003.
A miniscule portion of Infosys present revenues come from the areas being tapped through its new units. India now accounts for 2 percent of its revenues while China has a negligible part of the revenue pie, Gopalakrishnan said. But with emerging economies clocking strong GDP and corporate growth rates, the small market for domestic outsourcing is expanding rapidly.
The majority of Infosys revenues come from North America, as do those of most Indian software service companies. Consequently, they have had to bear the brunt of the rupees rapid appreciation against the dollar and the effect that has had of eating into outsourcing revenues. The rupee has appreciated about 12 percent against the dollar since January.
Infosys also plans an increased focus on research and development and the commercialization of intellectual property, as part of the restructuring. It will consolidate its various sales and marketing and consulting arms.
The move will not result in any significant staff addition, Gopalakrishnan said. Infosys has over 80,000 employees right now, and has already made campus offers to around 18,000 for next year.
Earlier this month, Infosys reported an 18.4percent rise in net profits, to US Dollar 280 million.
On Friday, Infosys shares closed up 0.5percent, on the Bombay Stock Exchange, at 1,848.60 rupees US Dollar 46.85. The Sensex was up 2.5percent, at 19,243.17. Tech stocks have been among the worst performing on the Indian indexes this year because of investor concerns over the impact of the rising rupee, and a possible slowdown in American demand.
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