Infosys declares quarterly results, changes pricing strategy for maintenance projects

Infosys Technologies reported a 28.7 per cent year-on-year growth in income for the quarter ended 30 June 2008, earning Rs4,854 crore. The profit after tax has increased by 20.7 per cent to Rs1,302 crore. Earnings per share went up by 20.4 per cent to Rs22.75.

The company explained that the net profit included a reversal of tax provisions amounting to Rs31 crore. Excluding this reversal, earnings per share would have been Rs22.20. The consolidated income rose to Rs4,854 crore in the June quarter from Rs4,026 crore in the year-ago period. Despite global uncertainties, Infosys expects its income to grow by 27.4-28.4 per cent in September quarter to Rs5,229-5,272 crore.

As for its subsidiaries, results were not so encouraging. Infosys BPO recorded a net profit of Rs33 crore, which is a drop of 17 per cent when compared to the previous quarter's performance. However, the revenue went up by 11 per cent to Rs306 crore, on sequential quarter basis.

Similarly, Infosys Australia net profit went down by 53 per cent to Rs14 crore when compared to the previous quarter (Q4, 2007-08). The revenue of the company also dropped marginally by 2 per cent.

Infosys Consulting, which is still in an investment phase, increased its losses to Rs6.3 crore when compared to a loss of Rs15 lakh in the previous quarter. The revenue of Infosys Consulting went up by 17 per cent to Rs74 crore.

The company added 7,182 employees in this quarter, taking the total headcount to 94,379 employees.

CEO and Managing Director, S Gopalakrishnan said, ''The uncertain global economic environment could affect IT spending in the near term but we also see opportunities as customers focus more on improving efficiency and look for global delivery models as we offer.''

The company also unveiled a new method of pricing software maintenance projects to make its revenues more effort-based and less manpower dependent. It plans to start offering clients 'ticket-based pricing' as opposed to fixed price and time and material-based pricing for software maintenance projects. The move is aimed at increasing revenues without a proportional increase in the number of employees.

Under this scheme, a customer's pay will be based on certain parameters such as whether the client request or 'ticket' that is raised is for a small enhancement in the software application, a big enhancement or a bug-fix.

Explaining the customer benefits of this mechanism, Infosys COO SD Shibulal said, ''A software application becomes more stable with time. But if a client has opted for a fixed price model, then even after the application becomes more stable and the number of requests decreases, the same price has to be paid. Ticket-based pricing will give them the flexibility to change that and reduce the total cost of ownership.''