Even as Infosys posted healthy growth for October-December 2013 and raised its revenue forecast (‘guidance’) for FY14, S D Shibulal, the managing director and chief executive officer, says it’s still work in progress.
Speaking to Bibhu Ranjan Mishra & Itika Sharma Punit, he says he’s not dropped the ‘cautiousness’ in his optimism. Edited excerpts:
Demand for the information technology (IT) sector is expected to rise in 2014. Are you optimistic about the year?
Our optimism has been factored into the guidance we shared. We are seeing a marginal improvement in client confidence.
At the same time, clients are taking longer to take very large investment decisions. So, so I will continue to be cautiously optimistic.
Against broad expectations, you have said client budgets would be flat. Why?
When we look at our client base, we think budgets would be flat in 2014. There are some segments where spending is seen marginally higher but in some other segments, it is marginally down.
For example, in segments like wire line telecom, the budgets have gone down. Though the segment was always weak, there was a thought that at some point, clients would figure a way to capitalise their investments.
This does not appear to be happening so far and we have a large dependency on that space. But, at the same time, clients are quite focused on cost optimisation, so that gives us an opportunity.'
What was the main thought behind the restructuring you announced earlier this month?
We are a very large organisation and making any large-scale changes will require enormous thinking. We have done large restructurings earlier, like the one we did three years earlier, when we merged subsidiaries and created industry verticals.
In an organisation like ours, which operates in a very dynamic environment, our structures, processes, systems, solutions, products and platforms have to evolve. And, they have to be drastically improved or reconstructed every two to three years.
Could there be any further restructuring?
Right now, we have made all these changes and I think we will give it some time. We will not be afraid to make more changes, if we feel it is required.
How effective does this new structure make the CEO?
The number of reportees to me has come down. I always had a large number of reportees and was able to handle them, due to historic and personal reasons.
But it will not be a viable option for an incoming CEO. As Mr Murthy (Executive Chairman N R Naryana Murthy) said, the new structure is also setting the stage for a smooth transition, as it will in a sense reduce the number of people who report to the CEO.
So, is the company now preparing for the transition phase?
New people have been promoted and they have to come up to speed. Then, the nominations committee has to decide who is going to be the next CEO. Only then, can we talk about that.
Infosys has seen unusually high senior-level exits. How has the company coped?
We are a large corporation, we have a very large leadership pool in place and we have done the transitions almost immediately and seamlessly when the exits happened.
You need to put these exits in perspective. You are talking about an organisation of 160,000 people. So, even if you look at one per cent of it as leaders, you are talking about 1,600 people and the exits that happened are a very small number.
Also, our client-relationship model is multilevel, so if one person transitions out, there are multiple people in the relationship chain who can take over. Also, we believe change is a part of a large corporation’s life.
Were these exits linked to the restructuring?
This is an organisation with a very high talent pool, and our people are very good. They have high aspirations, high ambitions and some of them have aspirations outside the organisation. All these factors played into it.
Your strategy has been to ‘Build tomorrow’s enterprise’ but with so much happening at the company, it somehow feels reduced to focusing on creating today’s structures.
For our clients, we are building tomorrow’s enterprises. We have not changed our strategy. All enterprises are built on today’s foundation. Tomorrow is built on today’s foundation.
So, the foundation also has to be strengthened, otherwise the structure will fail. So, building tomorrow’s enterprise also means strengthening today’s foundations and, thus, we are working with our clients on building tomrorow’s enterprises.
Do you believe Infosys has not been able to ramp up its products and platforms business as it wanted to? Are you looking to demerge that business?
Look at the facts. Our consulting and systems integration business has gone up to over 33 per cent. We have seven products and seven platforms in the market, and we launched a very good product this quarter, TradeEdge.
We had 14 wins this quarter. It is a different business model and it is growing faster than the company’s average. No company can grow by focusing on only one part of their business.
We have not made products and platforms into a separate subsidiary; we will let you know if it is done.
Are you satisfied with the current rate of growth?
It is too early to rest. There is more work to be done and our aspiration will continue to be industry-leading growth. We still have work to do.