Net profit in the three months to June rose to 2.8 billion rupeesmillion dollars) from 2.1 billion rupees the year before.

Revenues of the Nasdaq-listed firm shot up 41.4 percent to 10.8 billion rupees in the first quarter.

Markets surged on the announcement with Infosys rising 11.04 percent or 359.30 rupees during the day to close at 3,615.0 on the Bombay Stock Exchange.

"There is an increased interest in offshore outsourcing as global corporations realise its benefits," said Nandan Nilekani, president and managing director of Infosys.

"Business opportunities continue to grow. However, the pricing environment remains challenging and economic uncertainty continues," Nilekani told a media conference. "Unemployment in the US is at 6.4 percent which is the highest in 10 years and there are attempts to ban outsourcing."

He said offshore projects grew 15 percent sequentially this quarter while onsite projects grew only by six percent.

Significantly, the company increased both its revenue and earnings per share guidance.

Revenues are expected at between 237 million and 239 million dollars for the next quarter ending September and between 966 million and 982 million dollars for the full year to March 2004 --- up four percentage points from an earlier forecast of 13 percent.

It said earnings per American depository share is expected to be between 0.45 dollars for the quarter and between 1.81 dollars and 1.82 dollars for the whole year.

Brokers said the sharp gain in Infosys' share price was triggered by the fact that market expectations had been beaten, especially in regard to the upward revision in the earnings guidance for the full year to March.

"The feel-good factor which has been missing in the technology sector was brought back by Infosys Thursday. The results are better than expectations by at least three to four percent," said Venkat Iyer, director at R.K. Chary Stock Broking.

Another dealer said investors were upbeat on the earnings guidance given by the company.

"The company has also done better treasury management by hedging almost 230 million dollars... this has also benefitted the bottomline," he said.

Infosys said it added 22 new clients during the three months to June and that gross employee additions in the quarter totalled 2,175, the highest in the two decade-old history of the firm, taking the total workforce to 17,095.

"The strong growth in volume has exceeded our initial expectations," said S. D. Shibulal, head of Infosys customer delivery.

"Our utilisation (rate) has further improved during the quarter. There has been a change in the onsite-offshore mix" with an increase in offshore work, Shibulal said.

Infosys also increased its presence in the automotive and aerospace sector by beginning work for one of the Fortune 500 firms in the US and is assisting a leading automotive systems supplier in Europe with advanced simulation of crash conditions.

About 70 percent of the total revenues for the Bangalore-headquartered firm came from North America and about 17 percent from Europe.

"We have pro-actively hedged our net receivables (revenues) to mitigate the impact of rupee appreciation on our margins," said Mohandas Pai, chief financial officer.

The rupee appreciated over two percent in the last quarter, hitting the bottomlines of most software companies.

Infosys said if rupee depreciated further the firm would take a hit of one billion rupees on its revenues for the whole year.

SPACE.WIRE