After a rather below par performance, Infosys has finally seen some decent top-line growth in the third quarter. But the immediate success seems to sit lightly on the company’s new CFO Rajiv Bansal’s shoulders as he claims that it could be because of being there at the right time at the right place. In an interview with Business Line , 41-year-old Bansal talks about the challenges facing the bellwether and how it plans to overcome them.
So, you pulled a rabbit out of the hat?
I just happened to be at the right place at the right time. It is not just about this quarter but the effort that we have put in over the last few quarters. Right from the 3.0 strategy, the restructuring was done and changing an organisation’s culture takes time. As a continuation of that, we had good wins last quarter and the momentum has continued. We have a lot of deals in the pipeline and it is starting to pay off now.
However, there are still a lot of challenges. There are still deals to be closed and we still have gaps to be closed. I still have visibility of 97 per cent of the business in a quarter. Which means three per cent or $50 million has to be taken care of in terms of delivering a project in time, getting people onsite, etc. The challenge is that in such a economic situation, if a client delayed his outsourcing decision by two weeks, that would spill into subsequent quarters. This is where analysts need to look at numbers over a larger spectrum rather than on every-quarter basis.
But eight straight quarters of below market performance is a long time…
I am not for once saying that we did not underperform. I am talking about the future and I do not say that external performance impacted only us when others performed well. But we were affected since we had a huge exposure to discretionary spending. I still believe that we have to take challenges head on. When we see 2 or 3 quarters of good growth, then we can say that Infosys is back.
So, what are the lessons learnt in the last eight quarters and challenges that you face ahead?
We continue to learn every day. If you look at why we changed our strategy, IT is becoming highly commoditised. Most large outsourcing deals are becoming price-sensitive. There are players who come at different price levels due to their aspiration levels. We have been a premium player and as we thought that the IT industry were to grow at 15-16 per cent in a year, which would mean that we have to recruit 5-6 lakh engineers, and since there is demand from other industries for these people, there is a demand-supply gap. So, we have to pay higher wages to retain them. At the same time, the billing rates are coming down and this will have an impact over the long-term. When we sat down to work out a sustainable model, we decided to focus on products, platforms and systems integration. Unfortunately, when we changed our strategy, the downturn happened. Some of these factors hit us at the wrong time and when you talk about change in strategy, no time is good or bad. We realised that we had to take the journey and despite the pains in the short-term, if we know our journey we will be well-placed. As the environment improves, we will surely be well placed.
Do you now feel the need to revisit some of the features of the 3.0 strategy?
You don’t change strategy on a quarterly basis. It has been thought-through. What we tweak is execution. That is an ongoing thing. But strategy will continue.
Does the Lodestone acquisition give you confidence going forward?
It is too early to conclude but once our integration is complete we are confident that together we will succeed. Acquisition is a critical part of our strategy. If you look at one third of revenues come from products, platforms, we have to look at an organic growth. Our acquisitions will be driven by returns.
Your salary hikes last quarter looks like an after thought
A: It is not about what somebody did. When we gave the guidance in the beginning of the quarter, it was very difficult to give out hikes since we had committed to the campus offers. It became a difficult choice for us. If I don’t give hikes and put them on the bench, then the question arises as to why we recruited them in the first place. So, we worked out aggressive cost-cutting plans. Hence, despite the offshore hikes taking effect from January, it has not impacted our margins.