The Hindu Business Line : `Focus on new services paying off for Infosys'

INFOSYS Technologies, as per its earlier guidance, had a relatively flat growth in the first quarter of the current fiscal over the preceding quarter.

Revenues grew 4.2 per cent, while profits grew 3.6 per cent.

As Mr Nandan Nilekani, CEO of the company, finished talking with journalists on Infosys' plans for China, Business Line caught up with him for a quick chat. Excerpts:

Software development has traditionally given a lot of headroom to push up billing rates, but the proportion of software development to your overall revenueshas come down. Will that become a point of concern going forward?

If you look at our data for the last five to six years, 40 per cent of our revenue is coming from the services we introduced in the last five to six years such as consulting, engineering services, infrastructure, testing and systems integration. That is the point we have to talk about. Obviously, when a set of services you introduce goes up as percentage of revenue, something else will go down.

But does that limit your leeway when it comes to billing rates?

No. In fact, the 40 per cent from new services is a conscious plan to bring in new services and help in becoming a trusted partner. Therefore, it is very much on target as we had planned.

Your top 5 clients have de-grown in the last quarter while clients ranked top 5-10 have shown a growth of 5 per cent. Do you see a rejig in the ranking in future?

No, I think there will always be some ups and downs in any client relationship; but the important thing is that our base of customers is growing. Last year, we had 141 customers who gave us a million dollars of business, but this year we have 172 (who gave us a million dollars of business).

So, the base of customers is growing. Even if you look at the revenue of customers between 0-20 million, that is growing. I think that is good news.

You have acquired 9 Global 500 clients in the last quarter. Do you see them moving into the Top 10 or Top 20 ranking?

It takes time. A customer in the first year of operation may be a small customer but as they gain confidence with Infosys, get exposed to our service offerings, and as we build relationships at the highest level, then they are willing to give us more business. That has been the model we have grown.

So, all these customers in the future, and future is not immediate but several years hence, have the potential to be much larger.

Much larger would be Top 10 or Top 20?

May be Top 30.

Your banking, financial services and insurance (BFSI) segment grew 12 per cent . However, traditional verticals such as telecom and manufacturing did not keep pace with that kind of growth. Will these verticals slow down your growth in future?

We have to look at the specifics. What happened in the BFSI was that, apart from having growth in the US, we had very good growth in Europe.

And in the BFSI numbers, we also include revenue growth from Finnacle.

Finnacle did extremely well; it grew 41 per cent this quarter. So, all these three put together led to that growth.

On the telecom side, a couple of our large telecom customers didn't grow in this quarter. So I think these are very specific issues.

The thing is, if one grows, something else will have a lower percentage. I think we are comfortable that our vertical strategy is on track.

With inputs from Krishnan Thiagarajan

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