Infosys’ strong quarterly performance did not cut much ice with the markets, which were understandably concerned by the IT major’s tepid commentary on the future prospects and lowered guidance. However, Infosys CEO Vishal Sikka said the company is most likely to meet the upper end of its 10-12% annual revenue growth in constant currency terms. In an interaction with the media, Sikka says there are challenges in some verticals and that there is pricing pressure. However, automation is beginning to yield some results, he adds. Excerpts:
How do you see the business challenges in verticals such as BFSI, retail?
Overall I see that there is a great need for innovation to deliver the next generation work. In the third quarter I do see certain headwinds, and that’s just traditional with the industry. Based on the current visibility this is the guidance that we have provided. In BFSI, we have had good two quarters but there are certain challenges in insurance sector where there is more than usual cost pressures. In retail, the third quarter is the best season in terms of sales but there is still some volatility. In manufacturing we are seeing good traction in the auto sector but there is some softness in aviation and oil & gas. Overall it has been good but challenges remain in certain verticals.
What has been the impact of new initiatives like automation, artificial intelligence?
We are seeing the beginning of the impact of automation. For example in our new service offering AiKiDo, we have had 160 engagements through our Infosys Information Platform. This is new economics. In our Infosys Automation Platform we had 66 engagements with 52 clients. We have had significant effort savings where we have released 364 people in our BPO practice, 300 in infrastructure services and similar number in application, development and maintenance verticals. These numbers will become bigger. Automation is helping in traditional projects though it is still early to say that there are tangible benefits. Over time when the adoption increases, it will reflect on the topline and bottomline.
What is the progress on the target of increasing the revenue per employee from the current level of $51,000-52,000 to $80,000 by 2020?
There has to be further integration of people and software. The fundamental way to improve this is to bring the power of automation into the projects. We have taken significant steps of augmenting people with software which have improved margins while also increasing the attractiveness to clients.
Is there churn once again in the top level management at Infosys with CFO Rajiv Bansal quitting?
There is nothing to worry. Rajiv has had a great run of 16 years and it is sad to see him go. After 12 years I was done with SAP. We have a stable top management and the entire team is still intact. In the course of a career and companies, these things are natural. We have enough bench strength to manage these changes. Today, the attrition level in the company has come down and there is a tremendous sense of inspiration. Attrition is no longer an issue for us.
How did Infosys improve on the pricing realisation in this quarter?
I do not think one should read too much into pricing, there are many factors which contribute into this. In the second quarter, we had more number of working days. Many of the initiatives that we have taken will have a positive impact on pricing realisation. Overall the industry is going through pricing challenges and there is a lot of effort by us in terms of automation, tools, productivity improvement to counter the effect of pricing pressure.