Infosys CEO SD Shibulal has the difficult task of navigating the firm in a difficult business climate. He talks to FE?s Goutam Das on client behaviour and strategy in the quarters ahead.
Your innings as the CEO is off to a bright start. What would you attribute the good set of numbers to?
Yes, we have done well this quarter in a pretty challenging environment. If you look at any of the macroeconomic indicators, the unemployment, currency fluctuations, the Euro-zone turmoil ? all of these are challenging for our clients and us.
I would attribute our results to two or three things. One, it is because of our strategic direction which is finding good traction with our clients. Two, it is because of Infosys 3.0 which is about aligning in front of the client and increasing relevancy. I would also attribute it to our ability to deliver business value, be relevant and be global for our clients.
Everybody is worried about FY13 rather than this year. Do you have any early indications of how the IT budgets will pan out for the industry?
It is too early because clients are nowhere close to closing their budgets. Especially in these kinds of environment, the closure is late. Clients are not confident about the environment. My belief is that corporations will always exist and technology is the enabler for operational efficiencies, innovation and transformation.
In this situation, we need to invest in being relevant to them in all the areas in which they operate. We need to bring in new solutions, new productivity improvements, higher business value, deliver transformation. As long as we continue to do that we should be okay in the medium to long term. In the short term, you can have multiple challenges.
One commentary from an executive suggested that customers were not taking any long-term decisions right now. Are they not willing to invest in big projects?
Customers are taking a lot more time in deciding on projects which may take one to two years to deliver. If the benefits of the project are coming couple of years down the line, then they are scrutinising the investment and taking an informed decision. But if the business value is delivered in a shorter cycle, then the decisions are being made.
During the last downturn, spending on things like package implementation went slow. Are you saying the same horizontals have started to suffer again?
I wouldn?t characterise it like that. There are many transformational programmes where package may or may not be included. Large programmes could include transforming a client?s IT organisation; it could be investing into a new strategic direction. Those come under a lot of scrutiny.
In the last few quarters, Cognizant and TCS have topped Infosys in volume growth. Both these firms have higher exposure to BFSI than Infosys. Because BFSI could shrink in the current climate, do you think Infosys can now beat its rivals in volume growth?
I think we should focus on our performance. Our focus is to have superior financial performance, which we define as above industry average growth and superior margins. If you look at what we are doing with building tomorrow?s enterprise and Infosys 3.0, these are meant to deliver superior performance over the medium to long-term. In the short-term, we may have challenges because of the environment.
Is there any change in the firm?s acquisition strategy after you took over?
Infosys? strategy was always focussed on two-three things. It was focussed on country penetration objectives, deep domain building and consulting capability. Consulting is a lower priority right now. We have added products and platforms space to our acquisition strategy. There is no other change. We are actively looking at acquisitions.