S. Gopalakrishnan in Mumbai on Wednesday. (AFP)

Mumbai, Aug. 29: Infosys today said the billing rates for new customers could increase by 3-4 per cent following the sharp appreciation of the rupee against the dollar.

“For existing contracts it could increase by 2-3 per cent,” Infosys managing director and CEO S. Gopalakrishnan told reporters here.

A stronger rupee against the dollar is of concern to Infosys as it earns 60 per cent of its revenues from the US.

The rupee began rising gradually from 2003. However, in the recent single quarter it has appreciated sharply by 7 per cent, which will take time to absorb, he added. On the rupee outlook, Gopalakrishnan said it would continue to appreciate but the rise, if gradual, was manageable.

Infosys expects the US to contribute 50 per cent of revenues, followed by Europe at 30 per cent and the remaining 20 per cent from other countries.

He said the US sub-prime mortgage crisis was bound to have some impact on business volumes and the company was closely watching the American market, which was showing no signs of a slowdown.

“We have not seen any slowdown in terms of numbers of deals as yet. It takes time to feel the impact of such a crisis, but as of now there is no slowdown in the number of deals,” Gopalakrishnan added.

Infosys BPO managing director Amitabh Chaudhary said about 100 mortgage businesses have closed in the US sub-prime crisis, of which four were clients of the company.

The unit has 30 clients, with seven accounting for half of the revenue, he said.

“The impact should not exceed $1 million in revenue for the BPO business,” Chaudhary said. Gopalakrishnan said the IT industry was witnessing annual wage hikes in the range of 13-15 per cent for last many years, which were manageable with pricing.

On pricing pressure in BPOs, he said there were some pressures as competitive BPOs offer contracts on single digit profitability.

However, Infosys will not consider repricing, even if they lose a couple of deals. The verticals of growth will be telecom, energy and utility sectors.

China arm

The company’s Chinese subsidiary, which started operations in 2003, has not been growing at the expected pace. “Our growth in China has been slower than expected,” Gopalakrishnan said.

“Our global clients have not taken to China as much as we wanted them to be. This is because most clients feel that India is still the best off-shore destination,”