‘Our focus is on sustaining $1 b in deal wins’

Infosys Chief Operating Officer U B Pravin Rao during the interview with DH at Infosys Campus in Bengaluru on Tuesday July 31, 2018. Photo by Janardhan B K

Bengaluru-based IT major Infosys has, over the years, redefined India’s corporate culture, and it has become the most high profile company in the country. U B Pravin Rao, Chief Operating Officer and Wholetime Director of Infosys, in a candid interview with Furquan Moharkan and Uma Kannan of DH, speaks about the issues faced by the company, its plans and the growth prospects. Excerpts:

 

What is the logic behind the recent rejigging of verticals?

Earlier, we were reporting under financial based on the industries to which the client belonged. But, now we have to report based on how we are running our business. So, there is no change in the internal thing, there is no reorganisation or anything. But now we have reflected our reporting in line with how internal business segments are aligned.

 

Infosys is known for double-digit growth, when can we see such growth again?

With all the transformation happening there was a clear realisation that companies are investing in newer areas and the only way they could do it was cut cost elsewhere. So any company across industries looked at one side of the business and cut cost dramatically. Cost take out was a common imperative, across all the clients in the last two years. But at the same time, the pace at which they re-purposed the saving into newer areas was not in the same level as the cost take out.

"I am optimistic at least about the next few years, we will slowly start seeing better growth, I will not comment whether it is double digit or not, it’s difficult to predict. But at least in the next year, we will see better growth -- mainly because technology is maturing and clients are spending more."

 

Are you finding any difference between Indian talents and the rest? How does this localisation work?

In localisation, we are training on newer technologies. We are recruiting both - computer science graduates, where we can train them on newer areas, and in the US, we are also experimenting and recruiting people from liberal arts background and economic background and training them on areas like data science and other things. 

 

Is there any digital revenue target that you are eyeing in coming years?

No. There is no target as such. Today, 28% of our revenue comes from digital. And it grew 25% year-on-year and 8% quarter-on-quarter, so the trend will continue for a period of time, and consequently the percentage of revenue from digital will also increase.

 

How easy is the transition, wherein, you link increments of key management personnel to digital revenues?

Every year we have a strategic direction and strategic goals for the company, area of focus for a year, and at the senior management level, we have always had a percentage of goals tied to the strategic imperative of the company. It is just that in the past we were not publicly announcing it.

 

How are you bringing attrition to manageable level?

The attrition in the first quarter is definitely higher than what we had anticipated. I mean it’s a bit worrying kind of a thing, but at the same time, we believe that with some intervention we can bring it back. We have done many things in the recent past, which we have probably done better than what we have done earlier. I think we have not done a good job in terms of articulating back to the people --wherever there is deficiency we will probably try to correct it, but we believe it’s more about communicating all the things that we are doing.

 

Coming to India business, what kind of volatility has forced you to go slow on government business?

Most of our India businesses are very large. So, when you are executing programmes, your revenues from these programmes are high, and when they get into maintenance phase, your revenues come down dramatically, unless you have another programme to back it.

"Whenever there is a large programme that scales down, then you have a period of time, and particularly for us, a big percentage of our revenue comes from the government projects."

 

You have achieved a $1 billion mark in terms of deal wins. What is your next target?

The first focus is sustainability. The problem with any large deal is that many of these deals take six to nine months to complete.

Sometimes you think you are closing it and sometimes it is shifted to the next quarter. So, from a pipeline perspective, we are confident, but we have to wait and see whether we will be able to sustain it till the next few quarters before really setting up a bigger target. 

 

If TCS can be compared with Infosys, where exactly the company is lagging?

Only thing I can say is from the outcome perspective, our performance has not been consistent in the recent past. But if you look at five to six years ago, for about couple of years we were really lagging. TCS and Cognizant were doing extremely well and the rest of us were way behind.

"We had caught up about three years ago and we were number one, we had about 13% growth."

The next year we had 9.8% or something and marginally lower than Cognizant and we were number two. So, we have done well, there was a bit of a slowdown in the last year, but this year we will get back to the pace. So, we must get that consistency in performance, then I think other things will automatically fall into place.

 

What is the update on sale of Panaya?

It’s still up for sale and negotiations are going on, but the prices are not finalised.

 

How much pressure has local hiring put on your margins?

We don’t differentiate people based on their visa status at least from a maintenance perspective.

The compensation we give if a person is local or with H-1B is the same depending on the role and the skill they bring in. 

In a deputy role if someone is on the bench for 1 or 2 months, you can probably get them back to India but with locals you can’t do that. So that is something we need to figure and watch out for. Otherwise from a compensation perspective, we have never differentiated.

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