Infosys: Full Speed Ahead On Hiring, Economic Headwinds Be Damned

| About: Infosys Limited, (INFY)

By Chris Aylott

For the last few months, Infosys Technologies (NASDAQ:INFY), Wipro (NYSE:WIT) and other IT providers have been worried about drops in their clients' discretionary spending. Actions speak louder than words, though, and analysts at ICICI Securities report that Infosys is hiring like it expects more business soon.

That tracks with a February 16 article in the Times of India, which said that Infosys is looking to buy land and "expand its footprint" in India's second-tier cities. Infosys CEO S.D. Shibulal said that the company had hired over 45,000 people in 2011, and has already made offers to 23,000 new workers for FY2013.

ICICI Securities analysts think that the company has the deals needed to keep the new labor busy. Infosys signed five large deals during the last quarter, two of which were worth over $500 million. One of these super-deals was in Europe, suggesting that at least some companies are doing business despite the debt crisis.

Infosys still has challenges ahead. ICICI reports that as expected, discretionary revenue was a little slow last quarter, and Infosys got less revenue from its top 5 clients. All those new hires and development centers will be expensive if the company doesn't get enough work to keep them busy.

Shibulal has high expectations though, saying that the "need of the hour" is to grow at 9%, and that the budget will support the company's planned growth.

"We have to grow at 9 per cent at least," Shibulal says, "and I think that is the fundamental need for the country. The challenge is how you create nine plus growth."

Investors seeking a broad exposure to Indian IT companies may want to look at the ISE Chindia Index ETF (NYSEARCA:FNI), which devotes a total of 10% of its holdings to Infosys and Wipro.