Reuters Summit - Infosys BPO bets on high-margin businesses

By Esha Dey

BANGALORE (Reuters) - Infosys BPO, a unit of India's No. 2 software services firm Infosys Technologies (INFY.O: Quote, Profile, Research), said it will not cut prices to boost volumes and plans to grow its high-margin businesses in the next few years to temper the impact of the global financial crisis.

"We would like to add to our margins, but the current environment is not such that we can do it. So, we would definitely want to protect our margins," Anantha Radhakrishnan, vice president and head of strategic platforms, key solutions and alliances at the outsourcing firm, told the Reuters India Investment Summit in Bangalore on Tuesday.

Radhakrishnan said he expects the high-margin knowledge process outsourcing (KPO) business, which currently contributes about 5 percent to 6 percent to its total revenue, to form about 8 percent to 10 percent of its revenue pie in the next couple of years.

"We will continue to aggressively make investments in the newer delivery models, be it KPO or business platform solutions," he said.

The company, which recorded a dizzying 70 percent growth rate till last year, is expecting to lose some steam and grow just about 28 percent to 30 percent this year.

However, the company does not want to take the "short-term" options that could boost volumes at the expense of margins such as taking the call-center route or playing the "price war to a point where it gets into a vicious cycle."

Infosys BPO competes with other leading Indian BPO firms like Genpact Ltd (G.N: Quote, Profile, Research), WNS Holdings Ltd (WNS.N: Quote, Profile, Research), Firstsource Solutions (FISO.BO: Quote, Profile, Research), EXL Service Holdings, and Wipro BPO, a unit of software services firm Wipro Ltd (WIPR.BO: Quote, Profile, Research) (WIT.N: Quote, Profile, Research).