Back to double-digit growth, Infosys Technologies, India’s second largest information technology services exporter, has revised its revenue and per-share earnings expectation upwards for the full year. It has set an aggressive hiring target as well. S (‘Kris’) Gopalakrishnan, managing director &CEO, speaks to Bibhu Ranjan Mishra and Debasis Mohapatra on the overall environment and the opportunities they expect to tap into. Edited excerpts:
Is the period of double-digit growth back?
In one quarter, we had a double-digit growth. This quarter has demonstrated there will be quarters of double-digit growth. But at this point, we don’t know which quarter will that be.
So, this is a turning point for the industry?
Of course, as the industry has shown resilience to return to growth. It’s good to have a revenue growth of 24 per cent, which indicates the industry has bounced back.
Does it mean sequential double-digit growth will now be sporadic?
It’s always like that. Each quarter is not going to be the same. Historically, Q3 tends to be a quarter of muted growth. Similarly, Q4 is a challenging quarter to predict, because if there is a delay in the budget cycle, then the projects will get delayed. So, we have to wait till the budgets are finalised.
What does long-term visibility look like? Are the decisions you’re taking based on short-term visibility?
For the full year, we have said we will have 24-25 per cent growth in dollar terms. That’s why we are building the capacity to take advantage of the growth opportunities we see. We are seeing large deals have come back. We have won two $200-mn deals and nine transformational deals during the quarter. The pipeline looks good and clients are willing to invest on outsourcing. So, we are seeing growth both in the US and Europe. The cash positions of businesses at this point are pretty good and this is a good time for us.
Is the revision in guidelines based on short-term visibility or long-term?
It is based on the current visibility we have on Q3 and Q4. We do a bottom of computation of the potential business. We actually pool every single customer, especially the larger ones. We get an idea of their projects that are set to be in the pipeline in the next two quarters. Then, 98 per cent of our businesses are repeat business. That gives us an idea of what numbers will look like.
Your volume growth has declined from 7.6 per cent in Q1 to 7.2 per cent in Q2? Is the positive impact of the stimulus package eroding?
This volume growth is a quarterly phenomenon. I don’t read anything from this number. Though, historically, Q1 and Q2 are better quarters, the third quarter of last year was a better one. So, there will be changes in the volume growth, quarter-on-quarter.
A strategy for your newly set-up subsidiary, Infosys Public Services, is acquisition. When is it happening?
We are definitely open to acquisitions in this space, as this will accelerate the growth opportunities in government space in the US. We are looking at whatever can be done to further growth. We are hiring and processes are in place in this space.
You are revising your hiring guidance to 40,000. Is large-scale hiring back?
Yes, it is back. And, this phenomenon is not only restricted to India. It’s also happening in China and other places. The industry has shown it is again capable of providing large-scale employment.
But hiring is becoming costlier...all new recruits are demanding huge hikes over the previous salaries?
Salary was going up around 40-50 per cent in 2007-09. Perhaps, we are back in those times. However, we have to see if this is going to continue in future. I think it will depend on how the economy will perform, along with the supply side of human resources.
Contribution of the US market to overall revenues has come down. Is that part of the strategy?
We want the US market to grow, but also want other markets to grow faster than the US.
Have you started addressing the local Chinese market?
We are looking at the Chinese market. Though most of our clients are global corporations, we have won some contracts in there. We would like to further leverage our presence in China through our Finacle banking solutions.
