'Can't hold on to roles like politicians'

As Infosys came out with their second quarter results last week, a lot more changed in the company than its client matrix.

  The outgoing Chief Financial Officer (CFO) V Balakrishnan of the Rs 1.37 lakh crore (market capitalisation) company, after a 20-year tenure, including six years as CFO, made way for V-P Finance Rajiv Bansal to take up new responsibilities at Infosys BPO, Finacle and the company’s India Business Unit.

In a interview with Shayan Ghosh of Deccan Herald, the man whose dapper personality exercised a certain stability and trademark dry wit on his company’s balance-sheet, talks about the reasons behind a move that took the market and analysts by surprise.

Why did you step down so suddenly?
 
I’m stepping down because you have to give some space for youngsters to come up and grow into the role. That’s the tradition we have followed. We have found a good and able leader and the right time to do it, and thus, have done it.
 
What is the thinking that went behind it? Was giving youngsters a chance the only reason?
 
We have done it several times in the past and all those changes have been smooth and highly successful. We are a young company and the average age of employees is 24-25 years. We have to leave some  day, as we are not politicians sticking to the chair for a very long time; so whenever we find a good, young and able leader, we bring him up and give him the opportunity, let him perform.
That is how this company has worked.
 
Is this not a watering down of your role from that of a CFO?
 
Not really. These three businesses (BPO, Finacle and India Business Unit) are very important businesses for us as they have the opportunity to grow very fast. For example, in India, we are worth some $100 million, but if you look at the kind of spending happening in this country, it’s huge and we have to get a piece of that growth.

Secondly, Finacle has $300 million in revenues and in taking the product to global markets there is a huge opportunity awaiting us out there.

As for BPO, it is also a very fast growing segment for the company.
So, there are opportunities for growth in all these three businesses and we have to see how we can engage more deeply and take advantage of these opportunities.
 
Do you think that with your stepping down, Infosys’ image among clients will suffer?

At some point of time. things have to change, life can’t be static throughout. Things will keep changing, and at the end of the day, performance matters. We would know he (Rajiv) is able. When he (Rajiv) performs well, all this (change) would be forgotten by the market. In a company like us (ours), whenever there is change, the comparison will be unfair as we all have worked in this company for quite a long and we are its face; people relate us to this company. When a new guy comes in, we will always be skeptical, but this company has made changes several times in the past and over a period of time people will understand that.
 
What would you be doing in your next role?
 
The leaders are running the business and we have to work with them and try to accelerate growth in those areas because today they might look small, but there is opportunity for future growth. We have to get to that high growth path with these three businesses which can grow faster. So, we have to see how to get more growth from these businesses.
 
So, is Infosys betting even bigger on Finacle, the flagship product, with you stepping in?
 
If we have to build a highly profitable, non-linear business, we have to invest in a product like Finacle as we already have 70 per cent market share in India and the global markets are now opening up. We have to see how to get to those opportunities and grow faster. That is the key challenge ahead.
 
Why have your operating margins gone down by 160 basis points this quarter?
 
It went down due to multiple factors, and mainly because of increased cost in sub-contracting and also because we made higher provisions for post-sales customer support. So most of other costs also went up because of that, contributing to the decline. It’s not with regard to rupee which has been quite stable quarter-on-quarter. We have also projected that for the full year, our operating margins could fall by 200 bps (basis points), of which 100 bps would be on account of wage increase which we announced and another 100 bps from other costs which have gone up.
 
Is Infosys still going to chase higher margin deals?
 
Margin is not an input. We don’t go for deals focusing on margins. We go seek business which will give us higher revenue productivity. Margin is always the output; if you don’t get the topline right, the bottomline will always go wrong.
DH News Service