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Infosys sees larger outsourcing contracts

Infosys Technologies Ltd, India's second-largest software services exporter, expects to bag larger outsourcing deals from its overseas clients, a senior company official said on Thursday.

Infosys's head of worldwide sales, Basab Pradhan, told Reuters that software services contracts from its largest clients were already growing in size.

"The percentage of their IT budget coming to us is going up. So our share of their wallet is increasing," Pradhan said.

Indian technology companies have used their low-cost workers to take advantage of a growing trend among US-based companies to cut IT spending by shifting software support services overseas.

Earlier on Thursday, Infosys reported its net profit in the past quarter rose 12 per cent from a year earlier, helped by improved sales, which grew more than 35 per cent.

The Nasdaq-listed company also raised its full-year forecast for income from software services and products to Rs 3433-Rs 3467 crore (Rs 34.33-34.67 billion) as it banks on growth in outsourcing.

Infosys earned 24 per cent of its revenue in the past quarter from its top five clients.

Pradhan said Infosys expected some of the new outsourcing contracts it was currently negotiating to be worth about $50 million each per year. They are to be executed over the next few years, he said.

Analysts have forecast that outsourcing contracts bagged by Indian companies will be significantly bigger than the current average size of about $25-30 million per year.

"We have not done any total outsourcing deals of the kind where the entire IT operations and staff of a company is transferred to us, as yet. But we are bidding for such deals," Pradhan said. He said Infosys had bid alone for such contracts.

Analysts expect global technology consulting leaders like IBM and EDS, which have been under pressure in depressed markets, could team up with Indian firms like Infosys to reduce costs.

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