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Infosys for fixed-price, fixed-time projects

BS Bureau

Infosys Technologies is planning to increase the number of projects undertaken on "fixed-price, fixed-time frame" than on time and materials basis.

"The management believes that effectively structured fixed-price, fixed-time frame projects benefit the client by reducing the client's risk, while offering the company the potential benefit of enhanced margins for projects that are performed efficiently," Infosys said in its annual report.

The report said a key objective of the company's growth strategy is to expand the nature and scope of its engagements with existing clients both by increasing the volume of its projects and by expanding the breadth of services offered.

"By establishing broad, long-term relationships increases the quality and efficiency of the company's service to a particular client since each project performed for a client increases the company's understanding of the client's systems, requirements and business practices," the report said.

It also reduces the company's marketing costs, increases the client's reliance on the company and creates barriers to entry for competitors.

The company seeks to foster such relationships by delivering high-quality services on time and on budget and, over the course of a relationship, by increasing the integration of its services with the client's internal IT operations. To date, this approach has been highly effective.

Despite the company's high rate of growth during the last few years, over 84 per cent of revenues in both fiscal 2001 and 2000 were generated from companies who were clients in the prior fiscal year.

Beginning in fiscal 1996, the company aggressively sought to minimise its client concentration and to accept as clients only those that met strict guidelines for overall revenue potential and profitability. In fiscal 2001 and 2000, the company's largest client accounted for 7.3 per cent and 7.2 per cent, respectively, of revenues and its five largest clients accounted for 26.0 per cent and 30.2 per cent respectively, of revenues.

This balance is key to ensuring that the technology skill sets of the company's IT professionals remain diversified. Such diversification is critical not only in providing the company the flexibility to adapt to changing market conditions but also in attracting and retaining highly skilled professionals who seek the opportunity to continue to learn new technologies.

From fiscal 1997 to fiscal 2001, the company experienced compounded annual revenue and net income growth rates of 79.8 per cent and 97.7 per cent, respectively, and grew from approximately 1,405 IT professionals to approximately 8,656.

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