Forget low cost! Pay more, Infosys tells US clients

ACTING PRICEY: The IT major will charge new customers between 3 and 4 per cent more.

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New Delhi: Infosys will charge new customers between 3 and 4 percent more and will seek to negotiate a 2 percent increase in rates on existing contracts, Chief Executive Officer S. Gopalakrishnan said on Wednesday.

Hit badly by rising rupee, the plum profits of India’s second largest software exporter have been dipping over the past 4-5 months. And now to recover the losses, Infosys has decided to increase the price of contracts that it signs with firms abroad.

The downslide in the earnings has caused anxiety among most Indian IT firms.

First there were reports that the IT majors had decided to cut the annual salary hikes of the staff and add extra hours to combat the crisis.

However rising attrition, employees moving overseas and taking up foreign job offers has proved a major deterrent. The only way to get out of the ‘falling earning’ trap is now to increase the price globally for the software exports.

An expensive contract to the foreign clients means that the ‘low cost advantage’ that the Indian IT firms had so long been associated with will cease to exist.

India is no longer going to be ‘low cost destination’. It also implies increased pressure to raise standards and improve quality to match higher prices and global competition.