India's Infosys rides early recovery wave

DAVOS, Switzerland (Reuters) - India's Infosys Technologies INFY.BO finds itself in a sweet spot as recovery hopes take hold, with customers showing a new urgency to outsource operations, its chief executive said on Wednesday.

India’s No. 2 outsourcer was hit hard early in the downturn, reflecting its heavy exposure to the United States and financial services. But it is now coming out of the trough ahead of many other international companies.

“You are seeing a pent-up demand of projects coming our way,” Kris Gopalakrishnan told Reuters on the sidelines of the World Economic Forum (WEF).

“Companies do not want to increase their fixed costs so they want to outsource,” he added.

Infosys, a trendsetter for the $60 billion Indian outsourcing sector, raised its annual sales forecast on January 12 after a strong quarter to December.

That performance underlines a key theme echoed by many speakers at the WEF meeting in Davos this week -- emerging market economies and companies are growing much faster than those in the developed world.

Gopalakrishnan said prices, which had fallen in the downturn, had now stabilized but were “very unlikely” to increase for the rest of this year at least.

“In this environment it is going to be very difficult to increase prices. What you have to do is play with your business mix, play with your solutions, add more value and then, of course, you can charge more,” he said.

One weak spot for Infosys has been Europe. But Gopalakrishnan said Germany and France, in particular, remained key areas for growth in the years ahead and Infosys was looking at small acquisitions to boost its presence there.

“The likelihood of a larger acquisition is remote. By and large our target acquisition is somewhere between $300 million to $1 billion in revenue,” he said.

Editing Lin Noueihed