Iraq war, SARS impact Infosys' operations

The war in Iraq over the last three weeks and the dreaded Severe Acute Respiratory Syndrome have impacted the business operations of Infosys Technologies Ltd, the Bangalore-based IT bellwether of India, leading to cancellation of visits by its clients and recall of its employees working in the South East Asian region.

Though there has not been any real effect on its revenue generations, Infosys CEO Nandan Nilekani admitted in Bangalore on Thursday that due to the ongoing Iraq war and SARS fallout, hardly any client visited its corporate office for discussing business.

"Global uncertainty continues to loom large over businesses. The break out of Iraq war and the spread of SARS from China's southern province to other countries in South Asia has led to cancellation of client's visit to India since March 15th. We had to even recall some of our people working in Hong Kong, Singapore and Thailand," Nilekani stated.

According to company's chief operating officer S Gopalakrishnan, about 4-6 Infosys employees returned from Hong Kong and Singapore recently because of the SARS virus that has spread in the region.

Projecting the company's guidance for the new fiscal year 2003-04, Nilekani said the outlook continued to be challenging for the Indian software industry.

"Though the global delivery model, initiated first by Infosys, has become the mainstream as offshore outsourcing gains momentum, uncertainties relating to the US economy continues to have an impact on industry growth.

"We only hope that business activity will pick up leading to growth in 2003, while pricing pressures and competition will continue to put pressure on our margins," Nilekani declared.

In spite of the uncertainty and further delay in global economic revival, Nilekani claimed that outsourcing of services has come to stay, and would continue to be India's main strength in the world arena.

"One thing is sure, outsourcing to India is now mainstream for both software and BPO services. But intense competition in the market, and customers the world over constantly looking at ways and means to cut costs, pricing will continue to be an issue," Nilekani observed.