Infosys -- Naked Foreign Exchange Risk?

Infosys Technologies (INFY) announced earnings in a very bare bones earnings release. More questions are raised than answered. The corporate narrative is we are an outsourcing solution transferring expensive functions to inexpensive jurisdictions. OK Capitalism manifest in its raw form.

But consider this issue. For two years in a row Infosys trade receivables are exactly 16% of revenues. For a growing company operating in multiple currencies that is amazing. One of the reasons customers use Infosys is that trade finance is available. In the past customers had a payroll to meet constantly. Now you can drag your payments.

Keep thinking; multiple currencies and the customer decides when to pay. This cannot work out to Infosys’s advantage. Customers will pick the best scenario for themselves. Infosys becomes an inadvertent counter party to foreign exchange fluctuations.

Infosys Technologies is more of a commodities trading concern. The commodity is labour. What is it doing to protect itself? Currently is seems there is huge naked exchange risk.

Disclosure: No position in this stock