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We are looking for an acquisition in North America or Europe

Wednesday, 16 April 2014 - 8:35am IST | Agency: DNA
Post Infy's fourth-quarter results, BG Srinivas, president, global markets, Infosys hinted about a possible acquisition with $5 billion cash pile, more lucrative India deals going forward, and his happiness at being considered for the CEO job. Excerpts from an interview with Beryl Menezes.

Infy has witnessed a slowdown in key verticals of BFSI, manufacturing, and retail and in key geographies, especially North America. Is this slowdown expected to continue into the new fiscal?
Slowdown was specific to the fourth quarter, with most issues being vertical-specific. Thus, while the growth in the quarter was muted, we are not expecting the slowdown to continue into the new fiscal, except in some exceptional cases. But in other areas, the pipeline is still relatively robust, so if client decisions happen on time, we expect bigger deal closings and ramp-ups in Q1.

The 7-9% dollar revenue guidance for fiscal 2015, however, shows a continued slowdown. Is there scope for a guidance revision?
The reason we are seeing growth slowdown in this fiscal is because if you have two sequential quarters of weak growth (as guided by the company earlier), it would impact the full year. However, as we get into the New Year, things are looking okay and we will give more clarity, going forward. As of now, we believe we can meet the 7-9% guidance.

What are you doing to reduce dependence on discretionary spends and are you seeing more smaller deals, going forward?
There are several small deals, and typically some of the deals that start as small progress into bigger ones, so we are definitely focused on small deals for sure. Secondly, we are increasing our focus on the big deal pipeline in the non-discretionary space, at the same time we are focusing on digital transformation for growth.

What is the contribution of social, mobility, analytics and cloud (SMAC) to your overall revenues, given 50 deals closed in the cloud space in Q4?
We are focused on enhancing our capabilities and solutions to help clients transform themselves digitally, but there are also opportunities in the infrastructure management space (IMS) today and clients are looking at modernising their legacy systems, and in that context cloud opportunities are also there. That's why cloud revenues get disbursed across several service lines.

India business grew by merely 1.2%. Do you expect this to change post elections, given expected demand from government and BFSI sector?
In India, these are typically large turnkey deals, so it is very difficult to have a steady number. Plus, the revenue base is small, so fluctuation is possible even in the future. However, we will continue to ensure that the quality of deals is good and we will not be simply going after everything.

What about the impact of forex headwinds and rupee appreciation? Any changes to hedging strategy?
While we can't bet on the currency, we will rather continue to focus on our global business that is billed and contracted in dollars or other currencies. We will continue to hedge our receivables to two months to offset some of the volatility. However, in terms of client contracts we don't see any issue. So while there will be broadly no change to our hedging policy, we will closely monitor rupee movement and hedge accordingly.

Europe did better than all your geographies this time. Any specific plans for this geography in terms of expansion?
Yes, Europe did very well last year; we crossed $2 billion in revenue terms – a significant milestone and 25% of our revenues came from this market. So while it continues to be a challenging market in economic terms, our investment in Lodestone in Germany (our biggest market in the continent), as well as Switzerland has helped accelerate growth. We will continue to leverage on this and expand capacity in Europe to ensure that the investments we have made, particularly in continental Europe pay off.

What are you planning to do with your cash pile of $5 billion? Any acquisition in the offing?
We are looking at acquisitions like Lodestone in consulting, IP and platform space that can add to our growth portfolio. More specifically, we are looking at North America and Europe, in verticals like BFSI or energy, utilities or telecom.

So you are in the running to succeed SD Shibulal as CEO. What are your thoughts on that?
While that's a call for the Nominations Committee to take, I am happy to be in the race.


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