Infosys Technologies did not have a smooth first quarter, but chief executive Kris Gopalakrishnan remains upbeat about the company fortunes in the short term. He gives FE?s Goutam Das an update on Europe, discretionary spending and the India business unit, amidst a trying business environment. Excerpts:
You see a ?distant cloud on the horizon?. Do you fear the demand environment from Europe to deteriorate further?
We are not completely out of the woods from the economic downturn. If clouds in Europe result in a cyclone, yes, it is going to hurt the global economy and impact us. In the short-term, there is a lot more confidence because we know nothing untoward will happen that fast. Most of the growth at present is coming from the existing clients and they are growing slowly in Europe. That?s the reason Europe is flat whereas clients in the US are growing.
Europe aside, is there a pick up in discretionary spending?
Companies are continuing to spend on discretionary projects. They are realising that if they want to emerge out of the downturn stronger, they have to look at strategic initiatives, new products and markets, which, in turn, will require them to look at projects that can transform their businesses. Discretionary spending ? on system integration, package implementation, consulting ? is taking place, mainly in North America. Six months back, it was rare. That?s a positive sign.
Why is there no commentary on transformational deals or big deals in Q1?
The definition of transformational deals which we disclose is $30 million plus. We didn?t have anything in that range, but we did have transformational deals. We are in the running for many big deals, but this quarter there were not any $50 million plus deals either. It is not a cause for concern since most of the growth this quarter came from the existing clients. They are already large. If they are in the top 10, revenues have to be $100 million or more.
British Petroleum was reported to have cut its IT budget by 75% post the Gulf of Mexico oil spill. How will Infosys? multi-year contract with the firm be affected?
I cannot be specific about a customer. The energy & utilities sector is doing well for us and we have not seen anything unusual in that segment so far.
Infosys has raised the full year guidance. Where is the confidence coming from?
The confidence is coming from three quarters of growth. This quarter, the volume growth is one of the highest in the last two years ? 7.6%. Confidence is also coming from our discussion and surveys with clients.
The company has been investing in emerging markets. We have learnt that India business head Binod HR has been given a target of $1 billion in booked business by 2013-14. Is it possible?
I have said a billion dollars over time. We don?t externally say when. From a potential perspective, India is a large market. Just the government spending on information technology itself, in e-governance, is more than Rs 27,000 crore ($6 bn).