Infosys beats Wipro in exports

Infosys has become India's software export leader as the country faces significantly slower IT export growth

In this story: Ramping up billing rates Hit by U.S. tech slump Hope in new markets, outsourcing RELATED STORIES, SITES

By CNN's Kristie Lu Stout

BANGALORE, India (CNN) -- Infosys Technologies has surpassed Wipro to become India's largest listed software exporter.

On Friday, Wipro reported software export revenues of $379 million for fiscal year 2001. That fell short of its rival Infosys by over $20 million.

Infosys has become India's software export leader in a time of sobering economic projections. The country faces significantly slower information-technology export growth this fiscal year.

On April 11, Infosys reported $401 million in software exports in its annual results.

"What's happening is they have been achieving 100 percent growth over last 3 years. Even Microsoft doesn't have that kind of growth," a spokesperson from India's National Association of Software and Services Companies (Nasscom) told CNN.

Wipro, which is listed on the New York Stock Exchange, has also reported extraordinary growth rates. On Friday, the company reported a 150 percent jump in profits year-on-year for the fourth quarter, which ended in March. That beat analysts' forecasts.

Ramping up billing rates

Industry watchers say Infosys, which lists on Nasdaq, scored a strategic advantage over Wipro by ramping up its client billing rates.

"Infosys has managed to increase billing rates at a far faster rate than Wipro," says ABN Amro software analyst Supratim Basu.

However, Tata Consulting Services (TCS), an unlisted division of Tata Sons, remains India's largest software exporter.

TCS chief executive S. Ramadorai told the Economic Times of India that the firm would close fiscal year 2001 with revenues of $642.1 million.

Hit by U.S. tech slump

Singling out the impact of the U.S. tech slowdown, Nasscom has lowered its forecast for software-export growth. It now expects growth to run 40-45 percent this fiscal year, which runs through March 2002, down from 52 percent.

According to the trade group, the United States accounts for 60 percent of total Indian software sales.

The U.S. slowdown is even more significant for Infosys, which relies on North America for 74 percent of its total revenues.

Analysts are worried that spending is slowing at Infosys' largest customers -- Nortel, Lucent and Cisco.

When Infosys chairman N.R. Narayana Murthy warned of a sharp slowdown approaching on April 11, its shares plunged to an 18-month low.

Murthy said Infosys revenues would grow only 30 percent in fiscal 2002, compared with 113 percent the previous fiscal year due to the "current challenging economic environment in North America."

Hope in new markets, outsourcing

But some industry watchers say Indian software firms can weather the downturn by looking to other markets like Europe and Japan.

"If you look at IT spending globally, U.S. accounts for 48 percent of it, Europe is 24 percent, and Japan is about 10 to 11 percent," said Basu at ABN Amro.

"Historically, Indian companies have been very concentrated on that 48 percent of that market. Now, they are expanding in the 24 percent -- Europe."

Analysts also hope India will remain a target for IT outsourcing, as U.S. firms look for cost-effective and high-quality alternatives to expensive software production.

"Even solutions companies are sending more work outside the company to focus on core competencies. That's where Indian companies can benefit," said Ravindra Datar, Gartner Group senior software analyst.

Shares of Infosys closed 7.35 percent lower to $63 on Nasdaq on Friday. The NYSE-listed Wipro ended the day down 1.96 percent to $28.99.

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Infosys Technologies Limited
Wipro

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