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BW Businessworld

"Won’t Revisit Our Strategy"

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Infosys CEO and Managing Director, S.D. Shibulal faces perhaps the toughest challenge of his career now courtesy Infosys's dismal revenue forecast for the next 12 months. Speaking to BW from Canary Wharf in London, where he was present to inaugurate a new ‘customer experience centre' of Infosys, Shibulal defended the company's growth strategy and market outlook. Excerpts:

Why has the company stumbled recently?
For long, we have been a bellwether in the sector. So there have been certain expectations. We have delivered. But we just had a very difficult quarter where revenues de-grew by 1.9 per cent. This is the first time that we missed our guidance. I do not know where you are coming from when you say it is a miss in three of the past five quarters. The market might have its own expectations. But there are a number of positives. Revenue productivity per employee went up 4.2 per cent. We added 52 clients in that quarter alone. The products, platforms and services business has shown significant growth momentum with $350 million of total contract value. We give guidance as we see things at a point of time.

What is the next model of growth?
We want to be a next-generation consulting and services provider with a balanced portfolio both in a customer's cost and revenue side of operations. While we will continue to deliver services for ‘run the business', we also want to help clients innovate and improve revenues. Whether it is in cloud, mobility, analytics or platforms, we have made and continue to make significant investments. We are actively pursuing large outsourcing deals and I am confident that we will continue to succeed.
 
You have $4.1 billion in cash. Any acquisition plans?
We will not spend in acquisitions just for revenues. Quality of revenue is as important to us. Past acquistions such as Expert Systems, Portland or Macamish, all have been a strategic, value and cultural fit. What you call small, tuck-in acquisitions, we see as value creation. I do not understand this label of being conservative being stuck on us. Who invested in setting up a consulting practice a decade before others did? Who invested $120 million to set up a centre in China? Who invested in a products, platforms and services business ahead of other (Indian) players? If being prudent with shareholder money is conservative, I accept the blame. In most cases, we have invested, proven and delivered ahead of competition.

A few key exits and now the wage hike freeze — will these affect your ability to attract and retain talent?
No. We did a rejig, which is widely known, with the leaders being given P&L (profit and loss) responsibility. They decide on margins, hiring, clients, etc., within the broad parameters of what has been agreed. We are a 150,000-people organisation and running something this large is not easy. However, the restructuring is complete. People are empowered down the line to make decisions that add value to the client and the company. Our people are also understanding of the realities of the marketplace.

Do you consult Murthy during these challenging times?
I have worked with Murthy for 30 years, and there is nobody who has more experience than him in tackling such issues. I do consult him when warranted, but all of us have responsibilities and roles. When a large organisation undergoes massive transformation, there might be 5-10 per cent losses. I am focused on two things. Ensuring transformational change and seamless execution. It is a series of short terms which makeup the long term. I am not going to revisit our strategy based on a single quarter of performance.

(This story was published in Businessworld Issue Dated 07-05-2012)