After many quarters of disappointing performances, Infosys today delivered strong results. Chief Executive Officer and Managing Director S D Shibulal, in an interview with Bibhu Ranjan Mishra & Mahesh Kulkarni, talks about the factors behind the company's performance in the quarter. Edited excerpts:
With your strategy yielding results, do you think the quarter ended December would be a turning point for the company?
We have performed well this quarter. But the world hasn't changed. Our strategies were never meant for a couple of quarters; these were for a few years. We don't revisit these every year. Our strategy is all about creating a balanced portfolio. It's because some part of the revenue is being commoditised and coming under pressure. This means you have to build the portfolio in such a manner that it would remain less price-sensitive. So, from a strategic direction perspective, we are moving in the right direction.
This quarter, you recorded good growth, despite a fall in the revenue contribution from top clients. Is your balanced portfolio approach helping you reduce dependency on these clients?
This quarter, our revenue growth has been more broad-based. If you look at the last quarter, it was narrow-based. But I don't think we should read too much into the quarter-on-quarter trend. We will continue to focus on growing the top 10 accounts.
What is the significance of the deals you won in the quarter ended December?
Last quarter, we predominantly won transformational deals. But this quarter (quarter ended December), we won more large deals. So, the impact of the deals we won in the last couple of quarters would be very different.
Are you seeing ramp-downs of certain existing accounts?
We are not seeing that many. The frequency of ramp-downs has fallen. However, the environment is still challenging for our clients. We are still seeing delays in decision making, which is affecting large investment decisions.
Earlier, you had said the company's leadership, as well as its employees, had worked really hard to help record this kind of growth, despite the year-end furloughs.
This was a challenging time for our leadership and employees. We had delayed the compensation increase last year, though we had given select promotions. We have definitely undertaken some cost-cutting measures. We have a bench that is not been productive. It is painful for them (the employees) to be on the bench. That is why I said in these challenging times, employees showed commitment and remained very focused. That is the only way any result can be produced.
It has been reported Infosys may be considering performance evaluation seriously and planning huge headcount reduction.
One always has to look at the data; that is the only truth. Our attrition numbers have actually come down.
In the third quarter, our attrition fell to 4,435 people from 5,255 people in the previous quarter. At the same time, we are focusing on employee engagements.
Usually, clients finalise their budgets by January. Why is there a delay this year? Is this unusual?
Earlier, companies closed their budgets by the end of December. But now, that is history. In today's world, they close their budgets by January or even February. Besides, even if budgets are closed early, it does not mean much, as clients review these every quarter. Overall, we expect the budgets to be flat, or marginally down.
At this stage, what is your outlook on business demand in the next financial year?
For the next year, discussions would be held in April. The visibility would be based on the budgets of clients. At this stage, we haven't come to any conclusion.
Industry observers believe compared to 2012, 2013 would be a better year for the IT industry.
It could be true for the IT industry. But for Infosys, we don't know yet.
How is the Lodestone acquisition panning out?
The integration is in progress. It has certainly strengthened our presence in continental Europe---in consulting and system integration and the SAP (systems applications and products) space. More than 12 client deals took place in the last quarter. Recently, the joint go-to-market team of Infosys and Lodestone had won a deal in Europe.