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Infosys warns of revenue fall, but adds staff

Infosys has reported a 29 percent rise in fourth quarter profits but warns it will see its first decline in annual revenue as global demand slowed in a harsh economic climate.

But India's second largest outsourcer will add 18,000 staff in the year to March 31, 2010, even as it expects revenue during the year to decline by between 3.1 to 6.7 percent.

About 16,000 of the new staff will be hired from campuses, as Infosys intends to honour offers it has already made to students from these campuses, said S. Gopalakrishnan, Infosys' managing director and CEO, in a conference call with analysts on Wednesday.

The new recruits will not be hired at one go, but will instead be hired in batches, a spokeswoman for Infosys said.

As the hires will be mainly campus recruits, they will undergo a fairly lengthy process of training, she said.

Infosys' strategy will ensure that the new staff are ready to be deployed on customer work when the market picks up, she added.

Infosys however said it will freeze salaries this year to contain costs, as the outsourcing market gets more difficult.

The forecasted decline in revenue this fiscal year will be Infosys' first decline in annual revenue since the company started operations in 1981.

Infosys hired 28,231 employees in its last fiscal year, which ended March 31. However, the net addition to the payroll for the year was 13,663, as the company has tightened on its requirements of staff performance.

Indian outsourcers usually hire staff in advance of requirement to train them, cope with attrition, weed out staff that do not meet performance requirements, and also to keep staff on the ready for any unpredicted surge in demand from customers.

Infosys had a total of 104,850 employees as of March 31.

The company, like other Indian outsourcers, is seeing a slow-down in business as customers postpone expenditure on new outsourcing contracts and are also demanding lower prices from their suppliers.

"I do not see as yet a dramatic improvement ahead in the market conditions," said Siddharth Pai, a partner at outsourcing consultancy firm Technology Partners International (TPI).

In an Infosys survey of top customers, the majority said that a recovery will be beyond March of next year, said S.D. Shibulal, Infosys' chief operating officer.

Infosys is currently facing a decline in business volumes, decline in prices, and currency volatility, Gopalakrishnan said.

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