Infosys’ performance during the fourth quarter was certainly below par. But the company remains confident of its mediumto-long term prospects as CEO Vishal Sikka targets an aspirational revenue figure of $20 billion by 2020. He hopes to see Infosys regain its bellwether status by 2017. Excerpts from the press conference.
How do you see your performance in the fourth quarter?
From a long-term planning and strategy perspective, this is not something we need to be worry about. The need for an innovative company is here to stay regardless of the effects of cross-currency and so on. That is my long-term perspective.
We are seeing clients increasingly demanding next-generation and more strategic value services. Here, automation and dramatic productivity improvements are challenging the existing businesses in a very fundamental way. That is something we cannot ignore. This is exactly what we have been talking about in the last several quarters. I would like to see the results in that light. Some of the investments we made were done in that direction.
How do you plan to achieve the $20-billion revenue target by 2020?
There is definitely a deeper shift under way and customers are looking for different outcomes and proficiencies and strategic engagement we do with them. Towards that is the $20-billion target.
In terms of $20 billion as an aspirational goal, if you look at us for the next six years, we use that to organise our thoughts. The model we wish to achieve in a desirable environment is $20-billion revenue by 2020 with 30% operating margin and $80,000 revenue per employee. We want to increase this in the next six years. That would be necessary for a next-gen services company. Currently, we are around 1.8 lakh people and we would be roughly adding 70,000 over five years and augment them with software.
Of the $20-billion target, roughly $1.5 billion would be contributed by acquisitions in new areas. The remaining would require a growth rate of 13-14% annually, which is achievable by transforming our existing services. We think our services will become better due to automation. I prefer to think of the $20- billion target as something we need to aspire for.
How do you see Infosys’ long- term prospects ?
The trajectory is something we are confident about achieving. We feel that because on the one hand, we have started many initiatives to renew and improve our existing services, to make them differentiated. One can expect our rates increasing in services such as infrastructure management or verification services. We just had first evidence of this where Panaya and our existing practice won a very large deal. So, we see differentiation increasing in the renewal of our existing services.
Parallely, a new area we are investing in is an open source platform building next-generation analytical problems using that as well as our product design to help our clients.
Will automation and products drive your business?
If one looks at the Panaya acquisition, it demonstrates the power of automation when it comes to solving big problems. With automation, we see 70-80% of work can be replaced by this technology. In a couple of years, you will stop seeing the distinction between products and services. We are already seeing the results.
What prompted another bonus issue in a span of six months?
It is not about six months. We look at what shareholders have. To increase their base, we have to make the stock more liquid. Now, more small shareholders can also participate. With that in mind, the board has proposed a bonus.