Though there is uncertainty in the market, Mr S.D. Shibulal, Co-founder and Member of the Board, who presided over his first quarterly results as the Chief Executive Officer and Managing Director, felt that Infosys is on a strong wicket and pointed to the addition of 45 new clients in this quarter as proof of the same.
In this interview, he discussed various topics like market volatility and the threat posed by competitors like Cognizant. Excerpts:
You talked about market uncertainty. How long will this last?
According to the experts, this uncertainty will last for a while. It will impact us for a while and not be limited to just a quarter or two. Our performance will depend on our clients' performance and we are happy that we have done well in a tough environment this quarter. Our strategies are bearing fruit and we are seeing traction and wins, but if the ecosystem fails, we will get impacted.
You have added 45 new clients, but while $1-million clients have gone up sequentially by 14, other bigger clients have not shown big growth. Is it because of lack of spending?
No. To start with, most of our clients are not $1 million clients. But they eventually get there. Addition of new clients to the million dollar list is reflective of the fact that we are mining them.
Insurance has fallen quarter-on-quarter by 0.2 per cent and year-on-year by 1.4 per cent. What's the reason?
This is primarily due to some minor reclassification. We have added clients and we are not losing ground in insurance.
Infosys wants to concentrate on consulting, but this has gone down sequentially and year-on-year by 0.5 per cent. Why?
This is just on a quarter-to-quarter basis. We have 27 new opportunities in consulting. In absolute terms, consulting has gone up. Consulting as a percentage has gone down because Business IT Services has gone up. Just looking at the per cent figures can be misleading.
Do you feel that Cognizant poses a significant threat to Infosys?
We are interested in creating high quality growth. We are not concentrating on being the biggest but on being the best.
Infosys 3.0 is about a balanced portfolio and addressing industry challenges like economic turmoil, commoditisation, and the ability to recruit high quality talent in large numbers. We want to create non-linear growth and we feel that, over the medium to the long-term, our direction is right.
You said that 86 per cent of new hires in the US will be visa independent. Will this mean that you will lose margins by paying more for talent in the US as opposed to using Indian recruits?
The compensation is exactly the same and there will be no difference. We work on a same work same pay model and we pay the market salary for both. More than a compensation issue, this is going to be a utilisation issue.
If we have more people locally, it could affect utilisation, and we have to be cautious and address this issue.