India's No 2 software services exporter, Infosys Technologies Ltd, has felt a "negligible" impact on its business from the US subprime mortgage crisis, its chief executive said on October 22. "Given our size, impact has been negligible," Chief Executive S. Gopalakrishnan said in an interview.
US clients, who account for more than half of the company's business, have not pulled back on IT spending or cancelled projects with it, Gopalakrishnan said, despite the subprime mortgage crisis that has sparked fears of an economic downturn in the United States.
Adding to those worries is the rupee's steep appreciation - it has gained up to 12.5 percent against the US dollar this year.
"What challenged Infosys was this sudden appreciation," Gopalakrishnan said.
Gopalakrishnan said he expects the rupee, which has hit 9-1/2-year highs against the US dollar, to be very volatile in the short term.
Infosys, which has about 80,000 employees, has said previously that margins may fall by 50 to 100 basis points in the fiscal year that ends in March.
The company has also said it will lose about 20 billion rupees ($510 million) in revenue in the year, given the rupee's strength against the dollar.
But Infosys, whose clients include ABN AMRO, Goldman Sachs and Royal Philips Electronics, would be able to cope if the rupee appreciates gradually in the medium- to long-term, Gopalakrishnan said.
"If the appreciation is gradual, we are able to grow our business, sustaining margins," he said. The company was in deal talks with 14 to 15 companies in Europe and the United States at any given time, for an aggregate value of about $1 billion, Gopalakrishnan said, but declined to elaborate.
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