The year 2017 will be very eventful for Infosys as it expects a strong demand for next generation technologies even as it will have to be cautious on the nature of regulatory changes expected from its largest market – the US. Infosys CEO Vishal Sikka says that he does not see any discerning change or particular slowdown from clients but hoped that there would be a strong positive bias towards innovation. Excerpts…
Infosys has crossed $10 billion in revenues during 2016. Was that a target?
This is a huge emotional and psychological milestone for us and we were working very hard towards it and now we are looking at the $20 billion revenue milestone by 2020. This was brought about by the progress we have made through our “new and renew” strategy — the kind of progress we have made in artificial intelligence, automation etc.
What impact do you think the Trump administration will have on Indian IT?
We believe that given the background of the President-elect as an entrepreneur businessman and innovator, the expectation is that the administration will be business-friendly. We also expect that it will be an entrepreneur driven administration. Our long-term focus is to ensure that we continue to be innovative. On the visa front, we expect there will be changes on the policy. It is too early to tell and depending on the nature of the policies being adopted, we will have to address that.
How is Infosys preparing itself for any likely adverse visa legislation in the US?
We will continue to focus on local hiring. Our position in all the markets we operate is to look for local talent, only when we do not find that we go for the visa programme. That has been our principle in the past and will also be in the future. We will continue to make more investments in our major market in US. We will continue to build local centres across the world.
What benefits have Infosys seen through automation and artificial intelligence (AI)?
Automation is one of the key drivers of our strategy and it continues to make solid progress. This is not about eliminating jobs but the focus is on people versus equivalent jobs. One of the effects it has had on us is that it has slowed down the numbers we have added. In the first nine months of this fiscal, we have added 5,700 people as compared to 17,000 in the same period of the last financial year. We expect to increase our size, but the rate of will slow down. AI is a massive opportunity. It has brought in productivity improvement in our existing delivery systems and there is opportunity to bring in new kinds of solutions. AI can also help expand our customer base. If we are late to adopt AI than it can be disruptive to our industry.
Why has Infosys revised its revenue guidance lower?
We have not reduced the guidance. In October we had indicated an 8-9% growth, assuming that we will have -0.6% degrowth in Q3 but we did better than that. In fact, the lower end of our guidance has moved up. Our guidance range typically is a narrow range and as the year progresses the band shrinks.
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How do you see Infosys’ performance in the third quarter?
There has been an impact from RBS’s contract cancellation starting from the third quarter which we had earlier disclosed. However, if one looks at the nine months performance for the fiscal, we have grown 9.4% in constant currency terms and 8.3% in reported currency. This is at the higher end of industry growth rate. In terms of the third quarter, we are not blaming the environment but are focused on execution.