Infosys, which is facing a possible downgrade from brokerage houses for the first time in several years, has said that it will stick to its business model and not change course.
“The character of an organisation will come out in tough times. There will be pressure to change course. But the moment you succumb, you will fall. We will stick to our Infosys 3.0 strategy. We are going in the right direction,” V. Balakrishnan, a key board member of Infosys and India Business Head, told Business Line .
US FISCAL CLIFF
Balakrishnan, till recently the CFO of Infosys, said that if the US fiscal cliff talks are resolved, there is still hope for Indian IT companies such as Infosys.
Though the economic situation has not changed and clients are still hesitant to spend, “if the fiscal cliff talks get resolved, companies may change their view. Maybe in the New Year, they will spend money,” he said.
He, however, added that business strategies cannot be changed frequently.
The strategy outlined by the current CEO and Managing Director, S.D. Shibulal, when he took over one-and-a-half years ago, will continue.
He pointed out that in the short term, everyone was facing challenges.
“If you have a say on efficiency and innovation spending, you have a good combination. Companies which have both will survive. The challenge is in the short term. If you take a medium term view, we are well positioned.
“So, in the short term, you are facing challenges. In the short term, everybody is facing challenges.”
Rupee movement
Balakrishnan also felt that if the India rating downgrade happens, the rupee will go down to about 60, else it will remain in the 52-55 range.
He said India will continue to run a sustainable trade deficit.
“About 35 per cent of imports is oil. Another 10-15 per cent is gold imports. The balance is what you can control.”
He said there is less possibility of inflation coming down in the immediate future because government spending will not change as the elections are due next year.
Balakrishnan said one of the key reasons for shifting the Infosys listing from Nasdaq to the New York Stock Exchange was because the company had an enhanced brand image in the US and, hence, the same needs to be done in Europe, from where it gets 25 per cent of their total revenues. He expected listings in London and Paris in the next one to three months.
The private sector in India is yet to spend on software services and is more focused on getting IT hardware, said Balakrishnan. Hence, most of the large contracts will still come from the government.