Infosys Fades on U.S. Economy Concerns

Infosys managed to offset the falling dollar and wage inflation by shifting more work --including higher margin consulting projects -- to low-cost project sites in India. The utilization rate of its offshore employees, a measure of how active they are on billable projects, increased to 74.3% from 73.7% in the first quarter.

The company also raised its billing rates, buffering its profit margins against the 13%-15% increases in wages. Infosys' blended revenue productivity, a measure of its pricing power, rose by 1.9% in the quarter, up from a 1.1 % gain in the previous quarter.

A higher utilization rate and price increases helped boost the gross margin, and the operating margin increased several percentage points over first quarter levels. Margins also benefited from lower costs for visas of employees working in the U.S. This cost is typically most pronounced in the first quarter.

Revenue rose 37% to $1.02 billion, also topping forecasts, as the company saw continued growth in demand from its primary client bases in financial services, telecommunications and retail.

"We have seen good all-around growth in demand, in terms of geographic regions, the services we provide, and the industry verticals we serve," said Chief Financial Officer V. Balakrishnan. "We see that momentum continuing."

Growth was strongest in Europe, where Infosys has taken on new projects with telecom services providers and a large retailer in the U.K.