Despite
the solid performance in first quarter of the current fiscal year,
Infosys has adopted a "cautiously optimistic" stance and left its
full-year growth forecast unchanged. In the third quarter of the last
fiscal also, the Bangalore-based company delivered a surprisingly robust
performance, only to slump back in the quarter after that.
Acknowledging
the volatility in performance, in an interview with N Shivapriya and
Akanksha Prasad, chief executive officer SD Shibulal cautioned against
drawing conclusions about a secular trend based on a single quarter's
performance. While he described analysts as "experts", Shibulal refused
to comment on why they are getting Infosys estimates wrong quarter after
quarter. Edited excerpts:
In the last three
quarters, including this one, analyst forecasts have failed to get
Infosys' performance right. In your view, why is this happening?
Our
performance has been volatile in the last few quarters. Even at the end
of Q3, we said that a single quarter's performance cannot be taken as a
secular trend. This quarter we have done reasonably well and we have
not changed our guidance. We have a few challenges which we are trying
to address - high quality growth is one of them, plus there are also
challenges on the cost side because salary increases will have an
impact. We have to mitigate these through various methods. I do not want
to comment about why analysts are getting it wrong; they are the
experts. I do acknowledge that our performance has been volatile. This
is one of the reasons why we are optimistically cautious and have not
changed our guidance. Our guidance is a statement of fact and not a
statement of hope.
Does this quarter's performance feela vindication for you?
If
we look at this quarter, we have achieved 2.7% growth. On constant
currency, the growth is around 3.4%, which means we lost around $40
million due to currency volatility for the quarter.
You referred to certain steps the company undertook earlier that are showing results now. What are they?
Part
of the overall Infosys 3.0 strategy was to grow the consulting and
system integration business, which is now strong. The second aim was to
achieve balanced growth. The Business IT Services division was growing
below the company's average, so we brought in a lot of focus into that
segment. Our target is to bring it on a par with the company's growth
rate although as a percentage of the overall revenue it may not increase
because other divisions are growing faster.
What is your strategy to win large deals?
We
are working on multi-tower solutions and alliancesthe one we have with
IPSoft. Since business IT services is price sensitive, we need to ensure
that we bring tools, automation, and operational efficiency. It is
tough to balance margins and growth, but we have done it for many years
and we will do it again.
What are some of the changes you are making?
There
have been changes and it is part of the overall strategy. Despite
competition getting aggressive and poaching people, in the last two
years, we increased our sales force800 to 1,200. It depends on the way
you look at the glass - half full or half empty.
For Narayana Murthy, Infosys isa middle child. What is Infosys to you?
For me, Infosys is life. Most of my life has been spent here.
With your term ending in 2015, has the company set in motion the succession planning process?
We have a nominations committee, which has the responsibility for it. They are looking at it.
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