Infy CEO Shibulal reassures shareholders

Infy CEO Shibulal reassures shareholders

Infy CEO Shibulal reassures shareholders

Ever since Infosys announced its fourth quarter result in April 2012, showing a slower revenue and profit growth than its peers, it has been under constant scrutiny from analysts and industry experts.

The company’s revenue guidance for the current financial year projecting a lower than the industry growth rate, again added to the scepticism about Infosys retaining its distinguished position in the industry.   

Now, Infosys CEO S D Shibulal has come out with a pacifying letter addressed to its shareholders explaining the company’s performance and the road ahead. “Our ‘Building Tomorrow’s Enterprise’ strategy continues to see good traction with our clients and we are executing strongly on this through our Infosys 3.0 structure,” said Shibulal.

At the beginning of the last fiscal, Infosys had projected a growth of 18 to 20 per cent in dollar terms; however, the company, which had set a trend of outperforming its guidance, could meet only 15.8 per cent at the end of the fiscal, clearly missing even the lower limit of the forecast.

Explaining the reasons, Shibulal wrote: “While the macroeconomic challenges have been overwhelming, we were also impacted by company-specific issues such as reorganisation.” He also added that the management is working harder than before to get back to delivering predictable performance.

Narrating the strategy, the CEO said that Infosys had two choices for the road ahead; either to continue with the traditional outsourcing game by concentrating on short-term growth or redefine the industry with a new strategy that addresses the current challenges, enabling it to achieve superior growth in the medium to long-term. “We chose the latter path and announced our new growth strategy – Infosys 3.0,” added Shibulal.

Regarding concerns about their unused cash surplus of Rs 20,968 crore, the CEO wrote that the Infosys 3.0 strategy requires them to focus on their acquisition strategy for which the kitty will come handy.

Shibulal further assured that as a company, their focus has always been high-quality growth and strongly believed that margins and growth are equally important for an organisation. “To be future-ready, we need to make all the necessary investments. This is possible only with superior revenue productivity,” said Shibulal.