Infosys Technologies, on Wednesday, announced its plans to increase billing rates to new customers to offset the impact of rupee gains and rising wages eating into the profits.
In effect, Infosys will charge new customers between 3-4 per cent more and negotiate a minimum two  per cent increase in rates on existing contracts, Chief Executive Officer & Managing Director S Gopalakrishnan told reporters here. Hit badly by the rising rupee, Infosys has opted to increase the price of contracts that it henceforth signs with firms abroad. Mr Gopalakrishnan said “Not only Infosys, the entire industry now recognises the existence of a strong rupee and factor the same in its business plans.” 
Erosion in earnings
According to Mr Gopalakrishnan the industry can work around a strong rupee as long as it raises rates gradually and not rapidly. Infosys is facing an erosion in earnings from the US, its largest market, due to appreciation of rupee against dollar. Furthermore, Mr Gopalakrishnan, said Infosys is lowering its dependence on US customers through faster growth in other markets, but is not yet seeing a slowdown in US deals. “While the business environment is more positive in Europe than the United States, US clients were saying they would increase their offshoring budgets if the US economy slowed down.”
Further, Mr Gopalakrishnan was optimistic that the company could win more business from US clients if the subprime crisis curbs spending there, driving companies to cheaper service providers overseas. Infosys doesn’t plan to change its earnings forecasts as its back-office unit, which provides services such as call-centre operations, hasn’t yet seen a significant impact from the mortgage issue, he added.
“We are not seeing any slowdown in terms of number of deals or any such thing from the US yet,” Mr Gopalakrishnan said, adding “Even when companies are looking to cut costs offshoring model makes sense.”
Further, Infosys is pursuing “large” deals in managing networks for clients, Mr Gopalakrishnan said, without providing details.