Infosys targeting a growth of 26%

Written by Rachana Khanzode | Updated: Feb 10 2011, 07:39am hrs
With Nasscom predicting a growth momentum of 16-17% for the coming year, the countrys second largest IT services firm Infosys Technologies is confident of growing at a rate of 25-26%. Its CEO & MD, S Gopalakrishnan, says Infosys is focusing on a strategy where the firm intends to garner equal revenue generation from its operations, transformational and product businesses, in an interview with FEs Rachana Khanzode.

On the restructuring at Infosys...

We cannot comment on re-organisation. We have a strategy and action planning every three to four years and it happens in Dec-Jan time frame. Once the strategy is finalised, we look at all the business aspects, including whether the structure is aligned to the strategy or not.

On the current strategy...

Currently, our operations business, that includes BPO, infrastructure management, maintenance, validation and testing, is 65%. Second, the transformational piece, about 25%, includes consultation and system integration, and package implementation, where the client wants to implement a new strategy. Third is the innovation in products, which is about 10%.We are now keen to accelerate the transformation and innovation businesses. We want one-third of revenue contribution from each of the business. Not that we want to de-grow our operations business in absolute numbers, but growth on transformational and innovation (product and solutions) business should be much faster. This would also help us to go in a non-linear way. For consulting, we could look at outcome based pricing, that would give us some non-linearity.

On the time frame...

We dont know when we will reach there. Obviously, we have internal targets for the next three to five years, but reaching this goal will be driven by market and economic conditions.

On growth for the year...

Our goal is to grow faster than the industry. Profitability and quality of growth is very important to us. We are looking at 25-26% growth. We want to be a value player, have a portfolio of markets, so growth is not only the objective. Proactively, we are investing in Europe, Australia, India, China and West Asia. We are focusing on public services, utilities, healthcare and energy. We are recruiting to build on our consulting practice.

On acquisitions...

We have not lost out (due to lack of inorganic growth). Our growth rate has been more than the industry average. Our gross addition was 40,000, which is larger than many companies, so we have been growing, primarily organically. We have been able to retain our culture and system, which is important for our company. We want to maintain the strong Infosys culture in the company. We are looking at two themes in acquisitions geography based, in France, Germany, Japan and Australia, and in consulting and platform based BPOs.

On the environment and challenges...

The environment is positive and Nasscom's projection at 16-18% growth is optimistic. The four challenges are: unemployment is high in the US because of which the protectionist measures are high. Second is the sovereign debt in Europe if one country defaults, there could be a domino effect. When Lehman Brothers failed, the entire banking system was crippled.

Third is what is happening in West Asia and fourth, is the inflation, volatility in currency, foreign exchange flow because of excess liquidity in the world. This industry is dependent on the global economy and about 97% of our revenues comes from the global economy. Our clients are largest MNCs, so whatever affects the global economy, affects the industry.