The Billion Dollar Party

From the despairing cries of  global IT services slowdown emerges an
emphatic roar–from none other than Infosys. The industry bellwether has become
the first listed Indian IT company to post annual revenues in access of $1
billion, and in the process crossed a milestone in global IT business. Other
than Infosys, privately held TCS is the only Indian IT company to have revenues
in excess of $1 billion mark.

Narayana MurthyÂ

Announcing the 2003-04 results that showed a 33% growth over last year’s
revenues, Infosys chairman and chief mentor N R Narayana Murthy claimed that
Infosys is the fastest company in the software sector to reach the $1-billion
mark. Infosys’ rapid growth also validates the rise in use of offshore
delivery models by MNCs looking to lower their cost of running legacy
applications and building new ones.

Infosys president and MD Nandan Nilekani attributes the success of the
company to its Global Delivery Model (GDM). "By making GDM mainstream, we
have shifted the battle to our battlefield. It has become a global outsourcing
standard and has helped us create and perfect the science of global project
management," Nilekani said.

There is another aspect to this achievement–while the company achieved $121
million revenues in 1999 at the peak of the dotcom bubble, the $ 1 billion
revenue was achieved in the next five years during which the overall IT industry
was going through the worst phase led by the global downturn. "What,
however, is more important is that the billion dollars comes with 25% net
margins. Its not just about size, its profitability at this size," Nilekani
said.

On the other hand, being a $1 billion company also means a better market
perception and clout that will lead to a better competing position against other
IT services giants like IBM and EDS. Agree Infosys’ peers, who have already
started complimenting the achievement. "I think this (Infosys performance)
adds a substantial feel good factor to the entire industry," said Subash
Menon, president and CEO of Subex Systems. eFunds India head Atul Kunwar added:
"(Reaching the $1 billion mark) would further increase Infosys’ brand
recall amongst key decision-makers of companies looking at outsourcing.’

However, there are others like K Govindamani, ACC’s VP — systems, who are
not all that impressed. "Infosys brand is well known both internationally
as well as in domestic markets and the one billion dollar news would not lead to
additional benefits, other than some hype," he said.

However, one key question that seems to be on everybody’s mind is who would
be the next to achieve this landmark. Going by current revenue trends, Wipro’s
IT division seem to have reached the gates of the billion-dollar club, with
Satyam Computers not far behind.

Shubhendu Parth & Rishi Seth In New Delhi