Infosys opts for euro as dollar turns wonky

Infosys Technologies has started billing its European clients in euros as a hedge against a depreciating dollar.

"We have been gradually expanding in Europe and this is only logical. Our major presence is in the US and euro billing will only be a follow-up to dollar billing which is usually done," N R Narayan Murthy , chairman and chief mentor, Infosys Technologies, said in Mumbai on Tuesday.

According to a spokesperson at Infosys, "As part of our derisking strategy, we have been increasing our revenues from Europe over the last few years. This is not dictated by the change in the euro. Our European clients are billed in euro."

Infosys had earlier stated that even a 1 per cent appreciation in the rupee against the dollar could have an impact on its bottomline to the extent of 40-50 basis points.

As a net foreign exchange earner, the company already has a natural hedge on all forex-related payments and all dollar expenses are met out of dollar-denominated accounts. By shifting billings to euro at least partially, the company will be able to hedge the risk of depreciating dollar against the rupee.

Aman Chauhan, IT analyst with Taib Securities, said, "With the rupee appreciation expected to continue, billing in euro is a logical step to diversify its currency risk."

For the year ended March 2003, Europe accounted for 17.7 per cent to its total revenues. Europe is emerging as one of the strongest markets in the world economy.

UK is a key target; being the second largest IT services market in Europe. In order to penetrate the rest of Europe,  the company has also undertaken several branding initiatives during the last fiscal.

The company has further been expanding in Europe as a part of its global derisking model. Analysts say Infosys has been trying to beef up its presence in the European markets for sometime now.

This is also a measure undertaken by the company to reduce its dependence on the US markets where the economy is facing a slowdown. US accounts for 73 per cent of Infosys' turnover. Adding to the woes are also the  numerous labour issues which have cropped up in the recent past in the US.

In Europe, Infosys has marketing offices in Germany, Belgium, Sweden, Paris, Switzerland and Amsterdam apart from the one in UK. Further, the marketing efforts are being reinforced through establishing sales force in these countries so as to make inroads in the European market.

Financial services, retail and manufacturing remain Infosys' key verticals. The company is also focusing on healthcare, government and utilities sectors.

Infosys has added to their client base large European corporations such as Airbus, BHF Bank (Germany), Dell, Deutsche Investment Trust and Statoil ASA (leading Scandinavian retailer of petrol products). Infosys has started work in the government sector with assignments with the National Health Service, UK.