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Kris Gopalakrishnan: We aim for the best margins in the industry

Bibhu Ranjan Mishra | September 01, 2008

S Gopalakrishnan, better known as Kris, the CEO and managing director of Infosys Technologies, believes in taking one step at a time. Ever since he took charge of India's second-largest IT exporter about a year ago, Kris has been caught up with a number of issues, starting from an appreciating rupee to an uncertain global economic environment.

Critics often argue he lacks the ability to maintain the strong legacy and corporate leadership practised by his illustrious predecessors, N R Narayana Murthy and Nandan Nilekani. But in this soft-spoken CEO resides a great strategist, capable of executing arduous tasks without making too much of a noise. And this is evident from the fact that a company that is often blamed for sitting on huge cash reserves without using them to pursue inorganic goals has made two out of its three acquisitions during his tenure.

"Kris has a very different style from Murthy or Nandan. He is quiet but very firm. After taking over as CEO, he has filled the gap by bringing in some qualities of his predecessors. And in terms of expansion, forging technology alliances and focusing on acquisitions, he is much more vigorous," says a senior Infosys [Get Quote] official.

Though the decision to acquire the UK-based SAP consulting company, Axon Group, comes at a time when clients based abroad are asking for a lot of value-added services, it also comes at a time when competition in the IT services space is getting tougher, with companies like IBM, Accenture and HP gaining market share because of their sheer size and large number of offerings.

"This is a small step because if you compare revenues there is still a significant gap. But, for Infosys, this is an important step in our journey to be a valued transformation partner for our clients," says the Infosys CEO.

Of course, one of the reasons why the company wants the Axon deal to be a low-key affair, despite it being the largest ever acquisition attempt by any Indian IT firm, is because there is always a possibility of a counter-bid. Kris also agrees. "This is just a proposal," he says, adding, "Right now, we have to go through the process. We have to wait till November-end."

Infosys does not have a track record of successfully integrating large companies, especially when the target is into high-end consulting. Lately, Infosys, like most other Indian IT services companies, has been preaching non-linearity in growth, which means maintaining the growth momentum while not increasing headcount by bringing in high-value services to the table.

"It is a strategic decision. In will not only help them consolidate their position in the SAP domain, but also bring them certain strengths they do not have -- in terms of the types of clients, vertical strength and geographic presence," said Siddharth A Pai, partner and MD of TPI, a consulting firm.

Axon can be more than a valued possession for Infosys owing to the fact that the former's per employee annual revenue stands at $ 200,000, more than double of Infosys' $ 88,000. Axon's margins might be less, considering it does not have offshore capabilities that Indian IT firms have, fetching them better margins every time.

"I can only talk about their margins in the long-term. We aim for the best margins in the industry and will work towards that," said Kris.



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