Sweet spot: Infosys
Anil:
Wait a couple of months Trivandrum should be on the list by then,may be by then a few more ISPs will be 'online'.I hear the cable operators are seriously thinking to enter the ISP business as well in India,according to one study done by the top Cable companies there 40% of the 15 million cable-households are projected to be instant subscribers and avail themselves of the facilities.I think the 'cable route' is the best way to spread internet in India since cable subscription is growing in triple digits and there are already 15 million connections already.
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(Forbes Aug.26,98)
Sweet Spot: Infosys
By O.P. Malik
In the south Indian city of Bangalore, often labeled the Indian Silicon Valley, software services company Infosys Technologies Ltd. is almost a legend. The company started by eight software professionals in 1981 on a combined capital of Rs.10,000, or about $230, in 1996 had sales of $26 million.
Not such a big deal when you compare it with Netscape (NSCP) which in less than half that time has notched up sales of about $470 million.
But India's gross national product is less than the combined total market capitalization of the top two U.S. technology companies, Intel (INTC), and Microsoft (MSFT).
Infosys is one of the most admired and sought after companies on the Indian bourses. Ever since the company was listed on the Bombay Stock Exchange in June 1993, the stock has outperformed the BSE Index, up 2,834% versus a 55% gain in the Index. An investor buying into the company on its IPO in February 1993 would have earned an annual 131% return to date.
That stellar performance is unlikely to cool off soon. Morgan Stanley analyst Ajay Sharma expects the company to grow at an average of 51% annually through 1999, thanks to additional revenue from the Y2K (year 2000) problem.
Infosys has started In2000, a fixed-price service for millennium compliance on IBM mainframe/AS-400 computers. As a result, Infosys can count J.C. Penny, Visa, Nordstrom, Copeland and Equitable among its clients. The revenues from this venture for fiscal 1998 (ending March 31, 1998): $8 million.
Thanks to these overseas deals the sales have grown at a compound annual rate of 78% over the past four years, and net profit at a compound rate of 76%.
But this has always not been the case. Infosys was launched before India was a known software resource and in many ways the company had to sell India to its potential clients before it could sell its services. The first ten years of the company saw Infosys revenues grow from zero to about 90 million rupees, or about $2.4 million.
The company's big moment came when the company developed a complete distribution package for Reebok France, which in turn referred clients to Infosys, and since then the company has never looked back.
It has since established six offices in the U.S. and two regional offices in Europe, along with several units distributed across the Indian subcontinent. The expansion has helped the company spread its bets.
For example, Infosys lost its General Electric (GE) account in mid-1995. Even though GE at that time accounted for 25% of Infosys revenues, the company refused to lower its rates. A widespread panic among the investors ensued, but Infosys emerged from that squabble unscathed. The profits grew at the same 60% per annum average, and the company compensated for the loss of GE by adding a number of other large customers. Sales have also been helped by BANCS (an online banking software), DMAP (for distribution channels) and EAGLE (for warehousing), three products the company has developed internally.
Analysts like Sharma attribute this to the management skills of N. S. Raghavan, joint managing director and N. R. Narayana Murthy, chairman and managing director, a view which has been seconded by the readers of AsiaMoney magazine who voted Infosys the best-managed company in India and among the best in Asia.
The duo's objective is to create 100 software millionaires, dubbed Infoscions. Just like Microsoft and Netscape, one would imagine.
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