By Kalpana Shah

Infosys Technologies, India’s second largest software firm in terms of sales, posted third quarter results Thursday that should have stunned the markets.

But a 51.5 percent rise in profit to $220 million was not enough for investors on Indian bourses. They drove the shares down by 3.2 percent before allowing the share price to float back up. On the Nasdaq, shares of Infosys rose $1.68 to $55.91 in recent trading (see Infosys Makes it to Nasdaq 100).

The first India-headquartered firm to join the Nasdaq 100 Index in December 2006, Infosys posted a 43 percent rise in revenues to $812 million for the quarter ended in December.

The bulk of revenues (63 percent) continue to come from the United States as U.S. companies were first off the block to accept outsourcing as a way of corporate life.

However, Europe contributed a full percentage point more this quarter with a 26.8 percent share of revenues as companies on that continent finally began to acknowledge that outsourcing could contribute to their own enhanced bottom line.

What’s revealing is that development and maintenance work still accounts for over 40 percent of Infosys’ revenues, and engineering services contributes a mere 1.5 percent. It’s an indication that core work is still largely being done by companies in-house or in their home countries.

Outsourcing Clients Coming on Board

Infosys added 43 new clients to its portfolio during the quarter, taking the total number of customers it serves to 488. Of those, 256 have placed orders of $1 million to $5 million. As the value of the deals rises, the number of customers drops. Infosys has just two customers that pay out $100 million each for outsourcing.

At a press conference in Bangalore on Thursday, Infosys CEO Nandan Nilekeni told reporters that he doesn’t see any sign of a slowdown in the U.S. nor any sign of lowered spending on IT.

India’s National Association for Software and Services Companies estimates that revenues from information technology services will rise from $24 billion last year to about $30 billion by March 2007.