A large Indian software company is claiming it’s going to add an eye-popping 25,000 employees, almost half of Microsoft’s worldwide headcount, in the next 12 months.
And Infosys’ 28% margins are extremely high for a services company:
The company plans to hire another 25,000 employees over the next year, increasing its payroll by nearly 50 percent. Infosys said its revenue should increase by 22 to 30 percent this year, and its profit should rise by 26 to 28 percent…… despite 15 percent wage increases this spring, Infosys said that it expected its profit margins for fiscal 2007 to be about 28 percent, unchanged from last year… The Indian technology services companies like Infosys, Wipro and Cognizant have operating profit margins that are two to four times the level of their American rivals like I.B.M., Accenture and Electronic Data Systems. [Link]
The margins are likely to fall in the future; stories of raises and job-hopping in Bangalore are already legion:
The forces squeezing margins, analysts say, include regular wage increases in India of 10 to 15 percent a year, high turnover, and more competition from American companies that are hiring and acquiring in India to narrow the cost advantage enjoyed by the Indian outsourcers. [Link]
The only way to compete with Indians’ intrinsic cost advantage is to join ‘em. And, in fact, EDS just made a bid for Mphasis in addition to doubling its own Indian headcount.
