Eurozone issue: Infosys CFO differs from Murthy on impact
By siliconindia   |   Thursday, 20 May 2010, 22:05 IST   |    3 Comments
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Eurozone issue: Infosys CFO differs from Murthy on impact
Bangalore: At this crucial point the domestic IT players are worried about the lingering debt crisis in Europe, which has been rattling the global markets for weeks, and the confidence level and the opinion of the IT leaders differs. When asked whether there is a cause for the domestic IT firms to worry about the impact of the ongoing Eurozone debt crisis, drawing example from the company, Infosys Chief Mentor NR Narayana Murthy said, "I don't think so (there is a cause for worry) because we (Infosys) ourselves have been expanding in Europe. We are going to open a new office in Germany soon; we have just inaugurated a new office in Paris," he added. However, drawing example from the same Infosys in an interview with The Economic Times V Balakrishnan, Senior Vice President and Chief Financial Officer said "Until now we were not seeing any impact on the ground. Yes depreciation in Euro and British Pound (GBP) will impact revenue growth in dollar terms and it could also impact to some extent on margin side. But the positive thing is that rupee also depreciated against dollar, so to some extent it will offset some debt impact. Of course currency is a big worry now and we are closely monitoring it. We do take a short term view and hedge our risk but you can't eliminate the risk, only you can reduce the impact." Secondly, about the expansion of company in Europe Murthy showed much confidence and said "we (Infosys) have been expanding in Europe. We are going to open a new office in Germany soon; we have just inaugurated a new office in Paris." Whereas Balakrishnan feels that Europe is a very big mess and he added "if you look at our revenues from Europe, most of it comes from the UK and Switzerland. We have hardly any exposure to some of the PIGS countries where the problem is. But if it becomes a larger European issue, it could have an impact. Right now, we are not seeing any impact on the ground." But the fact is that presently there are concerns that the 1-trillion dollar Eurozone crisis fund and austerity measures in some Eurozone economies may further slow the European economy which may result in project cancellations, price-cuts and consequent pressure on their margins. But the national IT industry body Nasscom brings a consolation by saying that the IT sector does not feel threatened by the evolving crisis in the Eurozone economies. "The British new government that has come in is looking at cutting costs. However, the deals are with global companies which have been awarded after global bidding. Europe has not been protectionist and this is a transition phase. We don't feel threatened," said Nasscom President Som Mittal.

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