* Strong U.S. IT demand expected in 2014, to boost Indian IT
* Infosys to benefit, as highly exposed to U.S., but outlook
still lags sector
* Fast-growing rivals Tata Consultancy, HCL to also reap
* Infosys kicks-off IT sector results, reports June-quarter
* Possible changes to U.S. immigration legislation loom over
By Harichandan Arakali
BANGALORE, July 10 The strongest growth outlook
for U.S. demand for information and communication technology
since the 2008 financial crisis is likely to help Narayana
Murthy revive Infosys Ltd, the Indian IT giant he
founded, but the updraft will also boost its faster-growing
India's second largest computer services exporter, once seen
as a bellwether for India's $108 billion IT industry, derives 62
percent of revenues from North America, a larger share than
competitors Tata Consultancy Services Ltd, HCL
Technologies Ltd and Wipro Ltd.
Technology consultancy Forrester Research forecasts an
improving economy to spur U.S. businesses and government bodies
to increase information and communications technology purchases
by 6.1 percent in 2014, the steepest gain since growth of 5.8
percent in 2010, which followed a contraction in demand during
the global financial crisis.
Growth in 2013 is forecast at 5.7 percent.
"The demand environment is now quite solid," said Ganesh
Natarajan, CEO of mid-sized Indian IT outsourcer Zensar
Technologies. "This is the right time for all the
pent-up customer demand."
Infosys last month returned Murthy to the helm more than a
decade after he stepped down as chief executive to help reverse
falling market share and end two years of disappointing results.
The Bangalore-based company, which reports its June quarter
results on Friday, has struggled to reap the rewards of an
initiative to generate a bigger share of its revenue from
proprietary software, and has lost market share to Tata
Consultancy and HCL in recent quarters.
CONCERNS OVER U.S. VISA RULES
Several analysts expect Infosys to retain its April forecast
of 6-10 percent revenue growth for the fiscal year that ends
next March. Morgan Stanley, however, last week said Infosys may
cut that forecast to 4-6 percent.
Infosys' outlook lags the 12-14 percent growth estimated for
the sector in financial 2013/14 by the National Association of
Software and Services Companies, an Indian industry group.
"IT services from a macro perspective is looking good. Now
within the gamut of IT companies, all of them may not uniformly
benefit," said Tarun Sisodia, a director at IT industry advisory
firm Chanakya Niti Consultancy Pvt Ltd.
Looming large over all Indian IT companies is the
possibility that the United States, the sector's biggest market,
will implement as early as next year new visa rules that will
make it more costly and difficult to send workers there.
Infosys also faces management challenges. The head of sales
said on Tuesday he had left, and investors have voiced concerns
that the company is too reliant on its founders for leadership.
"A people disadvantage exists today at Infosys," Sisodia
said. "There is a people advantage at Tata Consultancy."
Shares in Infosys have risen 4.1 percent since Murthy
returned to the company on June 1, in line with gains in the IT
(Editing by Tony Munroe and Miral Fahmy)