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The Rediff Interview/S (Kris) Gopalakrishnan, CEO & MD, Infosys

Clients to ask for more transparency: Infy

January 14, 2009

With expectations still riding high on the IT industry despite the Satyam scandal, the declaration of the banks wherein the cash and deposits of India's second-largest IT services provider Infosys Technologies [Get Quote] lie, provided a breath of fresh air to the markets.

In a discussion with Bibhu Ranjan Mishra and Ravi Menon, S (Kris) Gopalakrishnan discusses the travails his company faced, client demands, utilisation rates, and how it plans to deflect Satyam-like situations.

Despite the tough global environment, you have managed to post a decent result.

We follow a standard model, which allows us to continue to focus on adding value to the clients and continue to add employees while still remaining profitable.

What message are you getting from clients on their IT budgets for 2009?

We are expecting the budgets of most of our clients to be finalised by mid-February. However, we are definitely seeing some impact of the slowdown because decision-making is getting longer and due diligence on the part of the vendor is also on the rise. Clients want to get those projects done first that give them maximum returns.

It appears that the increased utilisation rates, especially on the offshore front, hold the key to higher margins for you at this point of time.

The client benefits by offshoring because their costs come down significantly. We benefit because we are able to staff better. We are able to manage the quality of the projects better, and also able to execute these within our campuses. Offshoring results in better margins and is a win-win situation for everybody concerned. And, it is especially good in the current economic scene.

Does this mean that some of your onsite resources will now be moved offshore?

Some of our onsite resources have already been moved back, and if needed, we will move more. I will be unable to place a number on this because it is an ongoing phenomenon.

Your utilisation rate is stretched close to 75 per cent. Any scope for further improvement?

Our utilisation rate right now is at 74.8 per cent, excluding that of trainees, and about 69 per cent, including trainees. This will definitely improve because our target utilisation is in the range of 78 to 80 per cent. So, our current rate is lower than the range we were looking at.

What lessons has the industry learnt from the Satyam [Get Quote] episode? Do you feel that the clients, investors, employees and other stakeholders will start looking at IT firms with a suspicious bent of mind?

It is really unfortunate that this happened during a downturn. We think that in the short term, customers will ask for higher comfort level, which will enable us to go in for more trust-building.

There are expectations of higher transparency from every quarter, and we have to be ready for higher levels of disclosure. This quarter, we have announced the names of every bank where we have deposited our money.

How many common clients do you have with Satyam?

We have common clients and we wouldn't want to disclose names. Some of them have approached us. But, we are not proactively going to approach any of Satyam's clients. The situation is dynamic as a new board is in place at Satyam.

If we are approached by their (Satyam) clients, we will follow the standard process for business development that requires us to submit a proposal and get selected by the client based on merit.

What is your opinion on the World Bank-Wipro episode?

Wipro [Get Quote] has already clarified their position; so we don't want to comment further. We have never offered shares to clients under the directed share programme (DSP) like Wipro. We used to work with the World Bank sometime back, but not today.



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