Hughes gives hope to Indian IT

Hughes' glowing profit report offers hope to India's software economy

By Staff and wire reports

NEW DELHI, India -- Hughes Software Systems reported a 67 percent surge in net profits, beating expectations and giving hope to India's IT sector.

One of the leading Indian providers of communication software, Hughes' net profit rose to $13.44 million for the year to March.

Analysts had expected only a 54 to 57 percent rise.

The encouraging profit report follows a growth warning issued by fellow IT giant Infosys, a report that dimmed hopes of an Indian software economy that could withstand a U.S. tech slump.

"Overall, results have been quite good. The company has added nine (service) customers in the fourth quarter and 37 in the whole year," says Priya Rohira, analyst with Pranav Securities.

Battling the economic slowdown

"The outlook on Hughes looks quite good. The main challenge for the company would be how to battle the economic slowdown in the U.S.," Rohira added.

A company statement quoted president and managing director Arun Kumar as saying that Hughes continued to do well in a difficult market.

"During this (fourth) quarter, the company has expanded its customer base by adding 15 new product customers. In addition, the company has entered into strategic marketing tie-ups with Motorola, Nokia and Sun Microsystems," Kumar said.

Indian software manufacturer Infosys warned on Wednesday that the U.S. slowdown would damage its growth, leading to a sharp fall in share prices on the Bombay stock market.

Infosys chairman N.R. Narayana Murthy projected growth of only 30 percent this year, down from more than 100 percent in 2000.

However, India's Economic Times reports that most analysts believe the growth projection is an overly conservative estimate by the company.

Industry watchers still maintain that a bad U.S. economy might actually be good for Indian outsourcing firms to benefit from an expected flood of more cost-conscious American customers.

Hughes Software Systems is the Indian affiliate of U.S.-based Hughes Electronic Corp. Hughes Software's shares rallied eight percent to 522.35 by mid-morning on the Bombay Stock Exchange. The earnings results were released just before trading began.

Reuters contributed to this report.

Infosys disappoints on growth
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