We are now in a new normal: Shibulal

Infosys CEO and Managing Director S. D. Shibulal spoke to V. Sridhar soon after announcing the results of what he termed a ‘challenging quarter'. Excerpts: You said Infosys has been through a stressful and challenging quarter. In hindsight, how bad was this year when compared to the years since the global meltdown? In 19 years, we have never missed a guidance. The last quarter has been more difficult than ever before. That answers your question. You said IT client budgets are uncertain… Budgets are closed and they are flat or marginally down. But the real problem is slowing down of the velocity of decision-making. We are not seeing a committed spend plan (by clients and potential clients). I think the world is in a new normal. It will continue to be volatile and uncertain. Corporations will have to adjust and become more aware of this and learn to operate in these conditions. Our estimates of guidance have worked pretty well over so many quarters. But we now understand the need for greater diligence. This quarter was affected by a change in the underlying environment. We now have to factor these into our estimates, but there is only so much you can do. However, it is important for companies to stick to principles. So, we will continue to issue guidance to ensure that there is no information asymmetry. You have also spoken about the need to refocus on areas such as system integration on new platforms. How far down that track have you got? Have you had any setbacks in the last quarter? Our strategic directions are meant for a longer time frame — five to seven years, typically. They are not determined by the quarterly performance. Our strategic direction is determined by our focus on three key areas — transformation, operation and innovation. Our end-game is to have a balanced portfolio across all three. We are trying to occupy in a big way the products and platforms space. We had Finacle in the past, but our revenue from this segment was about 6.2 per cent. We also have a new business model that leverages cloud. The platform business did $25 million last year. But it is a sticky business, requiring investments upfront and returns will flow over a long period of time. It enables the conversion of clients' fixed costs to variable costs. Keywords: Infosys