Infosys CFO S Balakrishnan has no time to relax and feel satisfied with the company’s second quarter earnings beating its guidance. The rupee has again started strengthening against the greenback after two quarters of stability ? an event big enough to spoil any chances of a party, which was evident in the market not feeling enthused with Infosys shares closing down 1.49% on the BSE. In an interview with Surabhi Agarwal, he talks about his cautiously optimistic approach towards clients, the currency nightmare and the India story. Excerpts:

Once clients start finalising their budgets, what kind of deals do we see coming your way?

The environment has stabilised to some extent and people are coming and talking about deals ? some of them transformational and some regular maintenance work. But, I think clients are still cautious about the environment, as they have not seen any major change in the situation. Though they are talking about deals, it will take some more time before they materialise.

What about vendor consolidation?

Vendor consolidation will keep happening across the board and will not stop. Offshore players have a significant edge during these exercises. There are some large deals happening even in this environment. We have closed some six large deals in the current quarter and it will continue.

How serious a problem is currency fluctuation?

Current volatility is now getting difficult to manage. If we look at the dollar depreciating vis-a-vis other major currencies, the movement is around 10-15% every quarter. The rupee has also appreciated against the dollar. To an extent, the impact of both offset each other. But if the rupee appreciates further from the current levels, it could hurt our margins. We are already hedged against the rupee and we might have to reduce those hedges. However, if need be, we will have to take more cover against other currencies such as the euro, pound and Australian dollar. Currently, cross-currency hedges are around 10% of our total hedges of $699 million.

The domestic market is around 1% of your current revenue. Have you set a target in terms of future contribution as you see huge opportunities in this space?

It is a great market and there are a lot of opportunities, especially in the government side of things. We are targeting 5% to come from the domestic market in the medium to long term.

Medium to long-term would be 5-10 years?

I can?t specify that.