At Infosys Technologies, India?s second-largest software firm, he was credited with driving revenues from $2 million to $700 million over 10 years. Now, as the president and chief executive officer of iGATE Corporation, Phaneesh Murthy is steering his company in an uncertain macroeconomic environment. He speaks to FE?s Goutam Das on his strategy in a re-set world.
iGATE?s goal of $1 billion revenues by 2012 would mean growing five times in two years. Is this realistic?
When we set that goal, we had factored in organic and acquisition-led growth. Clearly, the slowdown and market conditions have set us back a bit. However, we are hopeful of achieving our goal by end of 2012.
What kind of companies are you interested in?
We are looking to acquire BPOs and niche IT companies. In BPO, we are interested in mortgage and health care verticals. From the size perspective, we are flexible and open. More importantly, it has to fit strategically for iGATE.
As CEO, what is your vision for iGATE?
Our vision remains the same, which is to enable the transformation of global businesses into virtual enterprises through our outcome-based iTOPS (integrated technology and operations) model, where we integrate technology and business processes. In iTOPS, we tell clients that we want to make money with them from the market and not money from them.
Firms are looking for value and pre-packaged intellectual capital?which our strategy provides?and therefore we are beginning to gain more traction. iTOPS services are complex to execute, but we have an early-mover advantage.
It has been two years since iGATE de-listed from Indian stock exchanges. Has the sole Nasdaq listing helped in better branding in the US?
It has certainly helped in achieving simplicity and clarity in structure. It has definitely helped in better branding.
Is there sufficient data to conclude that the era of sequential de-growth for India?s IT companies is over?
We expect significant growth in 2010. Existing customers are ramping up. Corporate America is not yet hiring. Hence, the outsourcing momentum is gaining pace.
What kind of deals are back on the table?
Mortgages are in big demand. We are also seeing a lot of interest in insurance. The financial services sector has not invested in technology since the second half of 2008. There is a lot of pent-up demand, and we are seeing rising IT spend.
We are seeing investments in digitisation and work flow enablement. The fact that iGATE posted 5% q-o-q growth in Q2 and Q3 of 2009 and 7% growth in the December quarter is an indication that the deals are coming back.
Many IT firms are opening onsite development centres. Is this driven by actual need or to tackle the rhetoric of protectionism?
As the IT industry enters more complex services, one will need to showcase the capability to deliver from multiple locations. The catalyst may be rhetoric of protectionism, but setting up such centres is part of natural evolution.
Many have commented that BPO would be the cornerstone of the IT services industry?s growth. Why will it be so?
Yes, I have been saying that BPO growth will be faster than the IT growth. This time, the recovery will be BPO-led rather than IT-led. There clearly is a lot more BPO work coming to India. Currently, about 19% of the CIO (IT) dollars is spent in India (offshore). This is likely to go up to 30% over the next 3-5 years. As against this, less than 3% of the BPO dollars is being offshored to India. I expect this to go up to 20% in the next 3-5years. Hence, the BPO growth will be at a faster clip.