Indian IT giant targets UK government contracts

Infosys' NHS contract could be the first of many UK government wins for the Indian IT giant, according its president and COO, Nandan Nilekani.

Despite the current row over private sector funding of the health service, Nilekani believes private involvement in IT infrastructure will bring enormous benefits.

The company became the first Indian firm to pick up an IT contract from the British government when it won a deal to design and build the National Health Service's electronic patient record programme earlier this month.

"We're applying commercial rules to the public sector," Nilekani told silicon.com. "It's a very exciting project because if you do it well, you touch millions of people."

John Higgins, director general of the CSSA, agreed that the government sector is looking particularly healthy at the moment. "It's probably the only part of the market that is really holding up right now for integrators and major system development," he said.

"It's a good space for anyone with high quality, competitive offerings. But they've got to realise it's a long haul contract, and the procurement costs will be higher than the commercial sector," Higgins added.

As a percentage, government money remains a small part of the company's business, but with an estimated $52bn to be spent next year on IT by European governments, the temptation proved too hard to resist.

"We've traditionally been very active in the finance and telco markets, but the likes of utilities and government are less volatile right now," said Nilekani. "There's lots of potential, especially in the UK, where the government wants more accountability and citizen orientation."

The company recently announced healthy second quarter results, but admitted growth over the next quarter was likely to be flat. "We're pretty much on target and the resilience of our business model is becoming clear, "said Nilekani.

"It's easy to make money when the times are good, but the real challenge is to make money in markets like these."

The company suffered in the wake of 11 September and the fears of a prolonged Afghan war, but shares in the company rallied after hitting a year low in September.

Infosys floated its new Public Service Practice in the US earlier this month, designed to tap into the lucrative government market in the US and Europe.