Not looking to buy ICICI Bank's stake in Firstsource: Infosys

Infosys is not looking to buy ICICI Bank's stake in Firstsource, a listed BPO services company, according to V Balakrishnan, Infosys CFO.

Firstsource Solutions shares surged 20 per cent on Thursday on the back of speculation of a deal. The company's share price has gained 80 per cent in one month. ICICI Bank holds 18 per cent in Firstsource Solutions. 

Balakrishnan said that Infosys was seriously looking at inorganic growth or acquisitions to boost the 'non-linear' business growth. 

“We want to localize our operations not just in US but also in Europe,” Balakrishnan said on potential acquisitions that the company could make.

About 62 per cent of the company's revenue is from US. Infosys also sits on cash to the tune of Rs 20,000 crore and investors either expect the company to deploy the money in the business or give more dividend

ICICI Bank’s non-executive chairman K V Kamath is also the non-executive chairman of Infosys. The street expects Kamath to steer the company on an inorganic growth path. Infosys has traditionally grown organically by offering services to customers. However, over the past few quarters, growth in revenue and profits has slowed.

Balakrishnan highlighted that companies that give business to Indian IT services companies like Infosys continue to go slow in awarding business contracts. He said that there was an uncertainty in the minds of customers (global companies) and confidence was low.

“The client confidence is still low. We expect IT spending to remain volatile for 2012-13 if uncertainty continues,” he said.

Infosys shares have gained 14 per cent over the past one month while the BSE Sensex gained 8.8 per cent. This clearly indicates that expectations are higher in the market. The company expects the rupee to remain under pressure for some time. Infosys gets most of its revenue in foreign currency as it is one of the largest software services exporter.

 On the issue of US visas, Balakrishnan said that the rejection rates for US work visas was rising but it was more on L1 visas than H1 B visas that Infosys depended on. The L1 visas are used by companies for a lateral transfer of an employee within an organization from India to US. The H1 B visas are non-immigrant work visas.

“We have a strong case and present all facts,” he said on the issue of the litigation that the company faces in US on visa fraud. He said that the company took compliance issues seriously and was committed to follow laws of any country.