Nov. 18 (Bloomberg) -- Infosys Technologies Ltd., India's second-largest computer-services provider, will gain from an increase in outsourcing at large companies trying to reduce costs, Chief Executive Officer Kris Gopalakrishnan said.

Offshore services, or work done at overseas locations such as the Bangalore-based company's offices in India, will go up because they are ``faster, cheaper and better,'' Gopalakrishnan said in a Bloomberg television interview in New Delhi today.

Infosys and larger rival Tata Consultancy Services Ltd. face concerns about whether they can sustain earnings growth as the global economic recession forces customers to cut technology spending. Gopalakrishnan is betting the slowdown will prompt some clients to cut costs by sending more work to India.

``There may be short-term challenges, but my sense is, when companies try to restructure and reduce costs, outsourcing will certainly be an option,'' said Mahesh Patil, who supervises the investment of the equivalent of $600 million at Mumbai-based Birla Sunlife Asset Management Co. The investments include stocks of Infosys and Tata Consultancy Services.

A survey of Infosys's top 100 clients has shown that several customers may outsource more services in 2009, Gopalakrishnan said in an interview yesterday, without specifying a number.

``The larger companies in India, who have maturity, who have scale, who have established themselves, they will benefit and Infosys is one of them; and the clients are some of the largest multinational corporations around the world,'' he said today.

Infosys, which cut its earnings forecast in October, is repeating a client spending-plan survey because the deterioration in the financial markets in September rendered the company's previous poll irrelevant, Gopalakrishnan said on Oct. 16.

`Fill Gaps'

Infosys continues to look for acquisitions to strengthen its service capabilities and reach and may spend as much as $700 million on such a deal, Gopalakrishnan reiterated today. The company in October abandoned its 407.1 million pound ($610 million) offer to buy the U.K.'s Axon Group Plc after being outbid by Indian rival HCL Technologies Ltd.

``There are two areas we are looking at -- one is to fill in the gaps in our services. The second area we would look at is geography -- Europe, Japan for example in Asia Pacific -- where we want to accelerate our growth.''

The Indian software-services provider may look to buy companies having expertise in areas such as technology consulting and infrastructure management, he said. Infosys, which made about 60 percent of its sales in the U.S. last quarter, is also trying to boost revenue from other regions.

Earnings in the year ending March 31 will probably be $2.24 a share, missing the low end of the company's July forecast of $2.32, Infosys said on Oct. 10. Net income in the fiscal second quarter ended Sept. 30 rose 30 percent to 14.3 billion rupees ($288 million), in line with analyst estimates.

Revenue for the year will range from $4.72 billion to $4.81 billion, less than the previously projected $4.97 billion to $5.05 billion, under U.S. accounting standards, the company said in October. Forecasts based on Indian GAAP were higher than July estimates because of the rupee's decline against the dollar.

To contact the reporters on this story: Susan Li in Hong Kong at sli31@bloomberg.net; Harichandan Arakali in New Delhi at harakali@bloomberg.net.

Last Updated: November 18, 2008 02:03 EST