Topaz is the proof of our leadership in AI: Infosys MD & CEO Salil Parekh

Parekh, CEO and MD, Infosys, talks about the company's vision for the next five years

It’s been over five years since Salil Parekh took over the hot seat at Infosys. In these years, he has stabilised the information technology major and is trying to make it more relevant to clients. Sitting in his cabin at the company’s sprawling Bengaluru headquarters, Parekh, managing director and chief executive officer (CEO) of Infosys, in an interview with Ayushman Baruah and Shivani Shinde talks about the company’s vision for the next five years, its bet to be an Artificial Intelligence (AI)-first company, and the macro environment. Edited excerpts:

You recently said Infosys would be an AI-first company. What do you mean by that, and what is the differentiation you bring with Topaz?

Topaz is the manifestation of our leadership in AI. We felt it was important to showcase and demonstrate this capability because, even internally, we are doing a lot of work in AI. We were the first to launch a detailed capability, and clients are very positive. Our earlier bet, Cobalt, is also doing very well with customers.

What we mean by AI-first, as an example, is that we have AI assistants that are available for all our employees today — whether they want to do software development, or some work in HR, finance, or other functions within the company. These AI systems are ready and available. With the 40,000 trained people we have, in a few quarters the whole company will be trained. We want to make sure that AI becomes a natural part of working for everyone. It is a way to improve productivity or do more things. AI today is central to the way clients are thinking, and this is both a consumer and enterprise trend.

How does Infosys change in the new AI-led environment?

Internally, things will change because everyone will be using the genAI platform. For our own software development, we have chosen an open-source genAI platform. We are feeding into it and creating large language models. If you look at our 80 projects, they are spread across all of our main sectors. Many of our large clients are working on genAI programmes.

There are two elements here: one, whatever work a person is doing, it helps to improve it. The bigger impact is that you see more work opportunities. Things that we could not do in the past are being addressed by genAI. Two, while there will be productivity improvement, we also see a larger addressable market through genAI and that will drive growth. In the long term, the trend of technology driving the world continues, and Infosys is well positioned.

You have completed your first tenure with Infosys, and the board and shareholders have given you the mandate for the next five years as well. How do you see Infosys over the next five years?

For us, the key is client relevance. We have stayed relevant as clients moved to the Cloud. We see technology becoming more and more part of large enterprises, as well as consumers. That is where we want to be playing. The past few years have been much more about making sure that part of Infosys is aligned with clients. The essential element at Infosys is that we are best at delivery. One instance is the income-tax (IT) portal. This time, 67 million have filed I-T returns with incredible ease. The goods and services tax (GST) platform is just registering a higher and higher number of users.

We have put in place a leadership team that will help us in this next phase of growth. It is a very strong team, consisting of people who have been with the company for 20-25 years and driving the new focus of the company based on AI.

You have been one of the best CEOs Infosys has had after founders Narayana Murthy and Nandan Nilekani. How do you react to that?

We have had incredible people as founders who have run this company. People tend to sometimes underestimate or overestimate it, but the reality is that the strong foundation of Infosys is the key to its success. If you meet any of our clients, it’s incredible to see the trust they have in Infosys. Nandan’s presence as chairman is invaluable for the company. I have easy access to the founders whenever I need to meet them, and all these factors help to ensure everyone is headed in the same direction. Even the board chaired by Nandan is very well aligned as to where the company is headed.

The first quarter of FY24, in terms of guidance, was a huge miss. Can you give some clarity on the challenging macroeconomic environment the whole IT industry is talking about?

First of all, we had an excellent first quarter with 1 per cent sequential growth and 4 per cent growth year-on-year (Y-o-Y). The large deals were very strong, with a TCV (total contract value) of $2.3 billion. We are benefiting massively from consolidation and cost-efficiency programmes. Our Cloud offering, Cobalt, continues to do very well and resonates with clients. Manufacturing and life sciences segments showed strong growth at 20.7 per cent and 13.9 per cent Y-o-Y in constant currency, respectively. Where we are seeing some slowdown is in financial services, investment banking, mortgages, payments, asset management, telecom firms, and some parts of retail. It is basically the transformation programmes or discretionary projects that clients are looking to scale back on. However, where there is large consolidation or automation, we see the benefits of it. So those sorts of things are where we see growth towards the end of this financial year. Our guidance clearly gives a strong indication that towards the back end of the year, we will start to see a positive impact from some of these deals and transformations.

Despite a strong order book, we have not seen it really convert into revenues?

You will have to look at this in the context of last year, where we grew for the year at 15 per cent and in Q1 and Q2, we were over 22 per cent. So, we had a very strong base of two consecutive years of very strong growth. You have a very high base. As a lot of these things come off, we will see them translating into revenue, but at the same time, in sectors like financial services, telco, and some parts of retail, we saw some projects slowing down or stopping. That is what has caused some delays in revenue conversion. They will take some time, as we will see the impact towards the back end of the year.

The industry seems to be divided about hybrid modes of work or working from the office. What will be Infosys preference?

We are very clear; our approach is to be flexible. We have been supportive of what employees need to do and want to do, as well as what clients want. There are cases where clients have insisted on working from the office, and those teams are working from campus. This approach is hugely positive. First, every week we see the number of people coming onto campuses. Two, our attrition has significantly reduced. We will continue to encourage it. I think it’s a huge differentiator for us.