On the back of global financial uncertainties and consolidation in the banking and financial services space, Infosys – which saw a minor dip in its revenue share from the BFSI space – has added 40 new clients in the last quarter with a majority of them in the BFSI space. However, the mood at the Infosys campus was a little subdued as the IT bellwether decided not to raise the offer for UK's consulting firm Axon. Kris Gopalakrishnan, CEO and MD of Infosys Technologies, discussed with Bibhu Ranjan Mishra, why the company decided not to pursue the acquisition and the road ahead. Excerpts from the interview:
What went wrong in the Axon case?
When we made the offer for Axon, we were aware that there could be a counter-offer since it's a public company. We looked at our offer and then the counter-offer, and felt that our's was a fair one. And that's the reason why we have not revised the price. Infosys as a company does not get into one-upmanship.
Are you satisfied with the performance in the quarter?
If you look at the performance of the company, it has been very good. We have done well on every parameter. The current economic environment is something beyond our control. And we have to try and manage our business in this environment, which we are doing.
But you are revising the revenue guidance?
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The guidance has to be revised down because of the environment, you have to be cautious. The impact of the financial slowdown is global and not limited to any particular region or country. Of course, part of the impact is due to major currencies depreciating against the dollar. Again that is something not under our control.
At the end of the first quarter, you had mentioned about sporadic incidences of clients asking for re-negotiation of deals. How many contracts have been renegotiated?
Whatever has happened, this has all been factored. When we said sporadic, what we wanted to say that it was not a trend. In normal circumstances too, some customers come for re-negotiation; others ask for certain discounts. So there is nothing different in this environment, and this is the reason why we termed it as sporadic instead of a trend.
Apart from BFSI, there had been a drop in revenue share from the telecom sector?
This is a minor change. In terms of percentage, there might be some minor changes from one quarter to another. But there is no trend yet.
What kind of deal flow you have seen and expecting in the next few quarters given the current environment?
The deal flow continues to be strong. Last quarter, we bagged five transformational deals and five large outsourcing deals – all around $50 million and more. And we have 12 fairly large deals in the pipeline. So the pipeline seems to be large and good. And now what we have seen in this environment, the ramp-up is not as fast as we want.
Are you thinking of any new opportunity in this kind of environment?
The opportunity and risk will depend on how companies approach this environment. I think there is an opportunity for us in the post-merger integration space. Once the companies go for acquisitions, they need to manage the integration work better. The second opportunity we see in this environment is that companies would definitely look at consolidating their spending and vendors. And that also gives a company like Infosys an opportunity. because we have a good track record.
Fixed-price projects are gaining currency. Is it going to be a trend?
Proactively, we are trying to increase our fixed-price because that is where we can deliver and get more from our clients. So there is an initiative from the company. However, the customers don't ask us to go for fixed price projects.