With 219 patents pending, Infosys awaits a non-linear push

Infosys Technologies, which surprised analysts with a 6.1% volume growth for the quarter ended December, is betting on its 219 pending patent applications in India and the US for a sustained non-linear growth.

In IT parlance, non-linear growth refers to a growth in revenues without a corresponding increase in the number of billable employees.

India’s largest IT company by market capitalisation sees its patents ready for leveraging in two years.  “The grant of patents typically takes 1-2 years. So we are optimistic. Patents take time because they have to go through a process,” Kris Gopalakrishnan, managing director and CEO of Infosys Technologies, told DNA in an interview on Tuesday.

The company, which currently has 5 patents, is also adopting other approaches to non-linearity.

“In existing projects, we are looking at transaction-based pricing, ticket-based pricing, unit-based pricing and things like maintenance projects, infrastructure management projects, etc.

“The second is platform-based offerings where business process is bundled with a platform. Thirdly, we a get a revenue share by the use of our IP solutions, etc. Fourth is licensing the intellectual property we have already developed. Another example could be success-based bonuses,” said Gopalakrishnan.

Earlier this month, Infosys got a contract from Aircel to provide a mobile application store for the telco’s subscribers. Infosys will provide the solution through its software platform FLYPP. 

Infosys is also investing to make its Finacle core banking solution more feature-rich. “We are investing to make Finacle country specific. Like we are now doing it for US and UK. We are investing on its sales and marketing aspects as also on its surround services so that we can do complete end-to-end system integration,” Gopalakrishnan said.

However, Infosys has to run at a faster pace than competitors such as TCS and Cognizant, which have either caught up or crossed the firm in revenue and profitability. “See, growth does not happen overnight organically. We can accelerate that through acquisitions surely, for which we are on the lookout,” Gopalakrishnan said.

Infosys, which maintained a margin of 27.3% in Q3, had a cash balance of Rs 14,449 crore at the end of the quarter.

The company’s consulting and China businesses turned profitable only in Q3. However, Gopalakrishnan is gung-ho on the China business. “On a quarter-to-quarter basis it may vary but we are positive on our China business,” he said.