Life for S. D. Shibulal, CEO & MD, Infosys Ltd., hasn’t been particularly smooth since he took over the helm. With volatility in the environment persisting and Infosys’ growth engine hitting a speed bump, Shibulal is under severe pressure to bring in numbers that cheer the market in the short term. However, as he reveals to Virat Bahri, Editor, B&E, these pressures aren’t on his priority list
B&E: The Infosys 3.0 transformation was launched some time back. Where do you stand with respect to its impact on your numbers?
S. D. Shibulal (SS): We have completed our strategic transformation. ‘Building tomorrow’s enterprise’ is a framework for innovation and co-creation. We organised ourselves completely into global industry verticals with new leadership in place. The strategy is in place, and we have a new structure and new leadership in place. We are purely in the execution mode. At the same time, where we started the transformation, we were coming out of the high of 2009; the environment was much more stable. Today, it is much more volatile. So actually, there are some delays in realising the benefits of the transformation; but we are confident that in the medium to long term, we should be fine. In any kind of transformation, you look at early indicators, but receipts are getting delayed. So we look at other early indicators. Traction is excellent with respect to our clients. We have conducted 50 plus workshops on building tomorrow’s enterprise with CXOs. Look at some of the wins we have announced like Atlas Copco & United Laboratories – some of them are driven by our workshops. Airtel and India Post are also driven through our innovation process. We have built a $380 million TCB on our products and platforms, which is a very strong booking. It is a new and different business. In a KPMG survey, we were ranked the most innovative in India. A recent Forrester report has also completely endorsed our strategy on IP & asset-based service portfolio.
B&E: There are challenges in the short term in your key verticals. What is your outlook?
SS: Retail is doing well for us. We are very well recognised in the digital market – digital commerce & social commerce. We have a SocialEdge platform for social commerce, a BrandEdge platform for marketing solutions and a TradeEdge platform for international business. We have strong service as well as IP capability in that space. Retail is growing above company average. Manufacturing is another industry where we are seeing very good traction and mostly in the business and IT operations space. Harley is a good example of that and so is Syngenta. In manufacturing, our wins are driven by the drive for efficiency in operations as well as IT. Financial services remains an area of challenge, especially capital markets. We have a higher dependence on financial services, where revenues are not going up. There are regulatory problems in a volatile situation and there is an enormous amount of focus on cost. So we continue to be challenged. In the Energy and Utility Communications Services provider space – there the segment in communication services has been an issue for us. Now we are increasing our investments in wireless and cable, where the spend is happening. So we expect medium term gains.
B&E: Critics lament your focus on margins, which make it hard to grow. How relevant is that?
SS: One thing you must remember. People link price and margin directly. Margin is a reflection of the company’s aspirations, philosophy, efficiency in operations, how do you manage, et al. So onsite-offshore ratio will impact margins. Utilisation will impact margins; the pyramid structure will impact margins. Currency will impact margins and so will portfolio. Some services have higher margins. Even client choices impact margins. We should delink the two. Everything that we do is to meet our aspirations. Our aspirations are to have above industry average growth and to have leading margins. I am having this margin conversation for the last ten years, or even longer. There is no guarantee for the future. But with our new focus areas – building tomorrow’s enterprise, balanced portfolio, global verticals, increasing consulting and system integration, products and platform strategy – it’s all going to meet our aspirations for the future.
On the price front, we are quite flexible. You have to look at your portfolio and your strategic clients. You don’t walk out of a deal with a strategic client because price does not meet by say 50 cents. Today our industry verticals have full flexibility with respect to pricing decisions.
B&E: The Infosys 3.0 transformation was launched some time back. Where do you stand with respect to its impact on your numbers?
S. D. Shibulal (SS): We have completed our strategic transformation. ‘Building tomorrow’s enterprise’ is a framework for innovation and co-creation. We organised ourselves completely into global industry verticals with new leadership in place. The strategy is in place, and we have a new structure and new leadership in place. We are purely in the execution mode. At the same time, where we started the transformation, we were coming out of the high of 2009; the environment was much more stable. Today, it is much more volatile. So actually, there are some delays in realising the benefits of the transformation; but we are confident that in the medium to long term, we should be fine. In any kind of transformation, you look at early indicators, but receipts are getting delayed. So we look at other early indicators. Traction is excellent with respect to our clients. We have conducted 50 plus workshops on building tomorrow’s enterprise with CXOs. Look at some of the wins we have announced like Atlas Copco & United Laboratories – some of them are driven by our workshops. Airtel and India Post are also driven through our innovation process. We have built a $380 million TCB on our products and platforms, which is a very strong booking. It is a new and different business. In a KPMG survey, we were ranked the most innovative in India. A recent Forrester report has also completely endorsed our strategy on IP & asset-based service portfolio.
B&E: There are challenges in the short term in your key verticals. What is your outlook?
SS: Retail is doing well for us. We are very well recognised in the digital market – digital commerce & social commerce. We have a SocialEdge platform for social commerce, a BrandEdge platform for marketing solutions and a TradeEdge platform for international business. We have strong service as well as IP capability in that space. Retail is growing above company average. Manufacturing is another industry where we are seeing very good traction and mostly in the business and IT operations space. Harley is a good example of that and so is Syngenta. In manufacturing, our wins are driven by the drive for efficiency in operations as well as IT. Financial services remains an area of challenge, especially capital markets. We have a higher dependence on financial services, where revenues are not going up. There are regulatory problems in a volatile situation and there is an enormous amount of focus on cost. So we continue to be challenged. In the Energy and Utility Communications Services provider space – there the segment in communication services has been an issue for us. Now we are increasing our investments in wireless and cable, where the spend is happening. So we expect medium term gains.
B&E: Critics lament your focus on margins, which make it hard to grow. How relevant is that?
SS: One thing you must remember. People link price and margin directly. Margin is a reflection of the company’s aspirations, philosophy, efficiency in operations, how do you manage, et al. So onsite-offshore ratio will impact margins. Utilisation will impact margins; the pyramid structure will impact margins. Currency will impact margins and so will portfolio. Some services have higher margins. Even client choices impact margins. We should delink the two. Everything that we do is to meet our aspirations. Our aspirations are to have above industry average growth and to have leading margins. I am having this margin conversation for the last ten years, or even longer. There is no guarantee for the future. But with our new focus areas – building tomorrow’s enterprise, balanced portfolio, global verticals, increasing consulting and system integration, products and platform strategy – it’s all going to meet our aspirations for the future.
On the price front, we are quite flexible. You have to look at your portfolio and your strategic clients. You don’t walk out of a deal with a strategic client because price does not meet by say 50 cents. Today our industry verticals have full flexibility with respect to pricing decisions.
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