Infosys too can play the price game

Ashok Vemuri, 43, head of the vital US market for Infosys , says there are "desperate" price games being played by competitors in a highly competitive outsourcing market and, if need be, Infosys too can play the game. But as a strategy, price under-cutting is a fool's game, says Vemuri, a potential contender for the job of CEO when SD Shibulal retires in 2014. The global recession has been a wakeup call for the company and there is a greater realisation internally about the need to use the bank balance to acquire companies, instead of trying to make everything in-house , he told LisonJoseph and Harsimran Julka in an interview. Here are edited excerpts: 
There is a growing perception that Infosys is now more flexible and willing to play the price game to get growth?We are maintaining a pricing premium. As your relationships improve and you move up thevalue chain, your price realisations will also improve. Cutting Prices a Tricky Game, says Vemuri

Reducing pricing is a tricky game because you can never recover it. We have some very experienced Indian competitors who are better at that game than we are. But it is a fool's game to get into. That doesn't mean that we can't do it. It's a competitive world. If there is a large deal and somebody else is under-cutting , we are not going to just sit around and watch. Our sales guys also have huge egos and they do what they need to, to win the deal. But it is a really fragmented market and even the largest player only has a 5% share. So, you can really move to a different sector, different technology or different geography and continue to command that higher premium . 

Can you give us a flavour of Infosys' deal pipeline from the US? Will all of them translate into revenues?We have a large number of deals in the pipeline but I don't think we want to convert all of them. Some of these are end-toend deals, which are more time-consuming and complex, so I don't want to be doing 20 of those at the same time as they would consume huge amount of bandwidth . But there are infrastructure and data centre consolidation deals, business transformation deals as well as products and platform-based solutions across financial services, manufacturing, and retail verticals. 

A large number of multi-billion-dollar deals are coming up for renewal. So, there must be a higher level of 'desperation' to win those deals?
You do see some desperate behaviour once in a while. Some of our competitors are perpetually behaving in a desperate fashion. But it is not just Indian companies which are undercutting, MNCs are also good at it. Indian companies are just more experienced at it. But once we move into transformational deals, products and solutions , there are not too many Indian competitors. That is where we go up against an IBM or Accenture. 

Most deals won in the second quarter are infrastructure related. Is that a sign of Infosys' renewed aggression in the commoditised business?Actually, some of these infrastructure deals are not just that. For instance, the Harley Davidson deal requires a lot of front-end consulting and system integration . There are elements of cloud, mobility, big data and analytics that go into these deals. So, bulk of what we do may seem like infrastructure, but it touches upon business in many ways over the next five years. So, in that sense, we are doing less of IT infrastructure and more of business process re-engineering . 

Are US visa rejections hurting?It's a much more stringent visa regime, no doubt about that. But we are not unduly concerned about that. But as a business, you cannot continue to have a variable out there that is out of your control. You have to hire more people locally, you have to re-badge client employees. It is not going to work otherwise. We have about 17,000 people in the US now and about a quarter of these are local hires. We plan to hire about 2,000 people, this year. 

What is the biggest challenge that you face in your role?Americas is the largest part of our business . So, the challenges that I face are largely the challenges that the company faces. We have a new strategy in place called Infosys 3.0 that is in execution phase now. It is not easy because we are doing it at a time when the world economy is in a downward spiral, but we cannot lose focus. We also have to ensure that our employee base is also up to the task in terms of being able to move up the value chain, for which they have to be compensated , which we have taken care of this quarter. And they have to be adequately trained. 

We also have to come to the realisation that we have a lot of capabilities, but not all. So, instead of trying to make everything in-house , we have to use some of our bank balance to acquire talent and companies that have been able to do things better than us. It is easier said than done. You may be the richest guy in town going to a party but nobody may want to dance with you. So, just because you have money doesn't mean you can find the right companies to acquire. 

Would you say there is a change in mindset at Infosys, regarding acquisitions?Nothing like a good recession to tell you what you don't know. Once you come out of it, you realise that there are hundreds and hundreds of things you don't know and you don't have the time to build it. That changes your mindset very quickly. It is always a battle between your mind and the mindset. The moment your mind overtakes your mindset, you will be in a good place. Then, you would not have issues about 'Should we buy or should we not?' You will be more like, 'When can you do it?'