Discretionary spends by clients has been a mixed bag, but IT budgets are slowly on the rise, says B.G. Srinivas, President and Member of the Board, Infosys, in an interview with Business Line . Excerpts:

The retail sector has done extremely well during the quarter. Is it to do with the seasonal uptick in the segment?

I would not read too much into the quarter’s performance. It is more a one-off thing. Yes, the uptick in the segment is due to the increased holiday sales during the quarter. In fact, compared to last year’s retail sales data, my own sense is that the shopping season has not been as good. But our own business in the segment is not generally related to retail sales.

What is the sense that you are getting with respect to IT budgets? As it is, the Fortune 500 companies are flush with cash and have yet to deploy them.

What you said is exactly what is happening out there. There is, of course, a bit more confidence at the client level, a bit more optimism compared to what it was last year. The uncertainty with respect to their topline growth has still not gone away. Hence, they are a bit more conservative with respect to conserving cash. They are under cost pressure, and so they are not increasing spends substantially.

Has the decision-making process while finalising deals quickened?

It has definitely quickened. Deals are still going through a fair degree of due diligence, but the pace has definitely been faster.

Have discretionary spends from clients picked up?

Discretionary spends vary by sector. In the energy and automotives, it is up. In hi-tech we see it is down. In banking, budgets are flat. It is a mixed bag.

Europe has been doing consistently well…

Europe has been an under-penetrated market. The headroom for growth is there. Europe is also opening up. Lot of clients who did not outsource earlier are now experimenting. In continental Europe, our acquisition of Lodestone has helped us. Countries such as the UK, Germany and Switzerland are key markets.

High-margin package implementation services have been growing steadily. What are the segments contributing to this traction?

Manufacturing, pharma and retail are the main areas where we are witnessing increased demand for consulting-led package implementation. It comes from clients wanting to rationalise their IT systems, given that there are instances of multiple ERPs running.

venkatesh.ganesh@thehindu.co.in

comment COMMENT NOW