UPDATE 1-India's Infosys: currency moves to impact Q3 revenue

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NEW DELHI, Nov 17 (Reuters) - Infosys Technologies (INFY.BO), India's No. 2 software services exporter, will see an adverse impact on its December quarter revenue from the rise of the dollar against other currencies, its chief executive said.

Brokerage Motilal Oswal said last week the weakening of the British pound and the euro against the dollar would put pressure on the third quarter dollar revenues of exporters such as Infosys, unless there is a sharp reversal later in the period.

"Definitely currency movement will have an impact but it is difficult to say what exactly it is," S. Gopalakrishnan told reporters on Monday.

"Right now, dollar is appreciating against all currencies, that is the impact you will have."

Although a weaker Indian rupee, which has fallen more than 20 percent this year, is positive for India's export-driven services firms, a sharp rise in the dollar against other currencies hurts revenues derived from business in other countries.

"I can't give you a specific number because we will quantify that at the end of the quarter. About 40 percent of our revenues come from non-U.S. market. When that moves and depending on which currency it is, we'll have to take the impact," he said.

Last month, Infosys, which develops applications, designs supply chains and offers back-office services, said it revenue in the quarter ending on Dec. 31 would rise by 8.4-12.6 percent to $1.18-$1.22 billion under the international accounting standards.

Nasdaq-listed Infosys (INFY.O) is seeing flat billing rates and the company is on track to add 25,000 gross staff in the current fiscal year to March 2009 despite the financial sector turmoil, he said.

Infosys, recently trumped by a smaller rival in the battle for a British consultancy, is still interested in acquisitions in Europe and Japan, Gopalakrishnan said, adding the company would be "comfortable" with a deal size of $600-$700 million.

Bangalore-based Infosys said last month it would not increase its 407 million pound takeover offer for Axon AXO.L, after HCL Technologies (HCLT.BO) announced a 441 million pound bid.

India's export-driven software service firms, used to a scorching pace of growth, have been badly hit by a slowdown in the United States, which contributes more than half their revenue, and the spreading global financial turmoil.

Last month, Infosys cut its forecast for full-year dollar revenue growth due to the global turmoil and the rise of the U.S. currency against euro and British pound, even as it beat expectations with a 30 percent rise in quarterly profit.

"Clearly we all know that the environment is challenging. We all know that impact is not just in financial services but spreading to other parts of the economy," Gopalakrishnan said. "We factored some of this (in guidance)."

He said although there were indications clients' information technology budgets in 2009 would be lower than this year, the allocation for outsourcing was likely to increase as they look to cut costs and boost efficiency.

At 0820 GMT, shares in Infosys, which has a market value of $14 billion, were down 1.5 percent at 1,200 rupees in a Mumbai market .BSESN that was down 4.1 percent. The stock has fallen a third so far this year.

(Reporting by Devidutta Tripathy; Editing by Mark Williams)