Bangalore-based Infosys Technologies posted disappointing results yet again and also cut its rupee sales guidance. The company's CEO SD Shibulal, 55, maintained that the company will grow at 5% this year, just half of the industry's growth rate of 11%. In a candid chat with Harsimran Julkaand Akanksha Prasad, he talks about steps Infosys is taking to return to the era of double digit growth. Excerpts: Looking at the client metrics, Infosys added around 39 clients during the quarter but also lost 35 clients. Could you give a reason behind large loss in client base?
This is not a client loss. We look at the minimal revenue from the clients and count active clients, if am right that is at present around $50,000 per quarter or something. The numbers keep moving up and down. Also a few clients belonged to Finacle. Since it is product, it is time-based engagement where you implement and finish the job and move on.
Was the decision of stepping down as CFO, a collective or an individual one take by V Balakrishnan? Did you consider candidates outside the company for the top job?
These decisions are always collective ones. How can you have an important change in the top team without planning and collaboration? The decision to choose the new CFO amongst a lot of candidates was taken by the nomination committee of the board. It should be best answered by them.
When do we see Infosys growing in double digits and matching up to the sector's growth predicted by industry bodies like Nasscom?
The transformation journey has started yielding results. We are now on the execution mode. We won 39 new clients in the quarter. We won a $200 million deal from Harley Davidson and a contract from the Ministry of Corporate Affairs in the quarter.
Our aspiration and objective always has been to grow above the industry average. Our new strategy (Infosys 3.0) is also geared towards that. I clearly believe we will be able to achieve industry leading growth in the long term. In the short term, we continue to face the macro challenges. Our goal is to grow above industry average in next few quarters.
What is your outlook on the macro environment for your business?
The environment continues to be challenging for us. The US is mired in challenges. There is a slight dip in unemployment rate in the US. But there is no secular trend. Europe is even more challenging, but it's just 10% of our business, and so the impact is much less. The US GDP growth is not up to the mark. The housing environment is still challenging. In India, we are winning large deals like that from the Department of Posts and Ministry of Corporate Affairs. But these are large social transformation deals and will take time to translate into revenues.
Why are your rivals such as TCS giving an optimistic forecast of a double digit growth and you project a negative outlook of the same market?
Different people look at the market in different ways. For example, India is just 1-2% of our business whereas somebody else may have a 8% business in India. One will get a very different commentary based upon client portfolio. My commentary is based upon my exposure to the business and my strategy.
Will your outlook on the sector improve after the US Presidential elections?
If I listen to any of my clients or analysts, it will be a protracted recovery, even after the results of US elections are announced.
What has triggered Infosys to give wage hikes in this quarter when nothing improved for the company in terms of sales or macro outlook? Was it something to do with rising attrition?
We had said that we will defer the wage hikes this year. The attrition has actually come down by 10% in absolute numbers. We are investing for the long term. We have to invest for all stakeholders. And employees are the most important stakeholders for us.
Infosys has been talking about the new strategy of 3.0, where the growth will be led by product and platforms and innovation. But Infosys is still seeing most deals coming of infrastructure?
We bagged two large infrastructure-led deals in the quarter. Infosys 3.0 is about balanced portfolio, which means we would have mix of businesses that are growing faster than other business, and some slow and stable growth areas. Product and platform will continue to grow faster than other areas, but that does not mean that we would stop growing in other areas. Our aim is to make products and platforms 32% of the total business.
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