With the US dollar depreciating against other currencies, Infosys registered a 1.6 per cent gain in margins. But currency volatility is a continuing concern for the IT sector which get over 95 per cent of its revenues from exports. Anil Advani, Head of Research SBICAP Securities, concurred that the company has managed well despite cross currency volatility and other macro concerns and "the only concern is the rupee movement". I do not believe with the view that the company is under-hedged. With so much of volatility it's difficult to judge, he added.

"Extreme volatility has affected not just the rupee, but is a phenomenon cutting across currencies. Cross-currency movements were to the tune of 10 per cent in Q2. On the hedging front, we continue to take a short-term view," indicated Chief Financial Officer V Balakrishnan. Infosys increased its hedges to $699 million in Q2, as against $598 million in the June quarter.

Infosys is also "scouting for smaller acquisitions" since it has $2.8 billion (around Rs 13,000 crore) as cash in hand. The company, says its management, will look for "strategic acquisitions".

However, for the next two quarters (Q3 and Q4), the company's operating margins would be impacted by around 200 basis points (bps) due to salary hike implementation. From October 1 this year, Infosys has raised its offshore employees salaries by an average of 8 per cent. Onsite employees received an average wage increase of 2 per cent.

Infosys will also hire 2,000 additional employees (mostly experienced hands) to take the total hiring figure for FY10 to 20,000. Infosys and its subsidiaries had a gross addition of 6,069 employees (which amounts to a net addition of 1,548). As of September 30, the number of employees increased to 1,06,000.

Source: Business Standard