It has been over a year since Salil Parekh took over as Infosys CEO & MD after a tumultuous period which saw the sudden exit of Vishal Sikka from the high profile job.

Since then, stability seems to have returned at Infosys which made the non-executive chairman, Nandan Nilekani, remark recently that it has become boring. In an interview with  BusinessLine  , Parekh, 54, shares his vision for the company and about the future of the domestic IT industry. Excerpts:

What has changed over the past one year in Infosys since you took over?

We have had a phenomenal year in FY19. We have increased our client relevance. Our digital business is growing at over 30 per cent. The clients are starting to see Infosys in a positive light. Digital is growing rapidly and has now become 34 per cent of our business. It is the main growth engine within the company.

We are now building a business for the next 10 years. We are re-skilling our employees; executing on building localised workforces in all countries, and building fully agile workspaces in our main locations in India. All this shows us which path we should take.

What are the things that you had to let go to get into this kind of phase?

Last April, we announced in the market about our strategic direction. It was all about where our clients are driving their business. Clients are driving two main types of activities today - one is the growth agenda that is centred around how do we get digital technologies to help them. So, our main strategic direction was to drive digital investments for clients' digital growth and improve automation so that they come to us. It was not so much letting go, it was about really putting much more intensity in the sales process. We pushed a lot into large deal programmes, into account expansion programmes, into a new client acquisition program. Those three types of programs and the sales intensity has helped us to build some momentum within our business line today.

You came from a large corporation. Any learnings from there that you have brought to Infosys?

There were a lot of learnings of how IT services work. Infosys has a huge strength in delivery. Clients really respect us because they believe that Infosys’ strength lies in deep delivery capability. We need to show the clients that we are building what is important for their future.

Work doesn’t come to Bangalore. We have to go there and make sure that they realise that you are in the game. About 60 per cent of our clients are in the US, 25 per cent in Europe and that’s where all the activity is, in terms of engagement with clients. It isn’t like sitting here in Electronic City and clients giving you work. Those are long gone.

Are there still any internal challenges, like the high attrition rate for example? What is the kind of message that is being conveyed to the middle and top-level executives?

We can improve how we are running our business, our recruitment process, sub-contracting process or our fulfilment process, through some of the attrition elements, through utilisation elements. So, on an operational basis, we have a lot of levers that we can improve upon to make the business more efficient in the future. The messaging, if you look first at the leadership team which is driving a go to market it is very stable. We have had the same team now driving the business, we have split that into five segments. On the delivery side also, all of our top service line leaders have a very clear sense of where they are driving the company. We have already made some changes in the re-skilling and compensation programme, but all of these will take time as we go through the whole company. We are hoping to improve all these operational measures, in the next few quarters to come. We see the growth in better shape.

What are the reasons for the high level of attrition and how do you plan to tackle it?

Our attrition level in Q4 or Q3 is lower than what was at the start of the year. Even four or five years ago, it was higher than what we see in our competitors.

Infosys has always believed in training for employees. We put graduates through intense training which makes them very attractive to some of our competitors. Having said that, we still want to improve and reduce the attrition level.

Has the engagement with clients changed, especially because of more focus on protectionism in the US?

I think the way it has worked today is that our clients are still engaged with Infosys. On the political side, we put in a newer approach where we are recruiting within the US, Europe, Australia and the Asia-Pacific (APAC). But overall business environment is not affected by this. We are also building a resilient business model, independent of what the situation is in Europe, the US or Asia.

In the past, there have been issues regarding with regard to whistleblower complaints and acquisitions going wrong. What are the things that need to be done to ring fence Infosys from such situations repeating themselves?

We want to carry out future acquisitions in a manner that makes it easier for everyone to follow what is going on. The board is very supportive of all of the acquisitions. We have a strategic direction based on that and at the same time we have to be careful to see that the integration is working well. We have to make sure that we put in people from Infosys into these companies in every key positions and make sure that it integrates into our existing service lines.

You did mention the fact that 34% of your total business comes from Digital. To accelerate the growth there, will you look at more acquisitions? 

I think we have a good portfolio and there is always a way to accelerate it. So, to accelerate some of those things we are still looking to do more acquisitions in the digital space. There are growth areas on the cloud, software, service, and cyber-security areas.

Down the road, there is this mid-tier IT company which faces a hostile takeover bid. This doesn’t quite happen in the domestic IT industry. Do you think this will form a template for future acquisitions in the industry?

There are 2,000-3,000 small players. So, it is not that easy to consolidate because of the cultural element. Those forces will play up if you get the right combination of things, and you have the right management teams, but it is not as straight forward as it looks. When you bring any two companies that are different culturally, there could be some issues.

While topline growth is comforting, Infosys is struggling to arrest its margin downtrend. Are you consciously sacrificing margins to drive growth?

If you look at FY19, the key question is on pricing. Pricing will remain more or less stable or slightly improved throughout the year.

What we have done, in terms of the approach for FY‘19 is to put money into areas on building digital capabilities, sales capabilities, large deals, into re-skilling, localisation and into some compensation adjustments which had not happened for some time. Then we have some operational levers, in terms of utilisation, in terms of sub-contractors, in terms of how we are doing our recruitment... With that, we feel fairly confident, that the guidance we’ve given is where we are going to end up.

If you look at the core applications business it has been falling for three quarters now. Is digital coming at the cost of the core?

Our core business in FY‘19 is still growing, slower than 30 per cent but it is still growing. If you look at some of our competitors, most of their core business is shrinking. That is because we have a very strong story on delivery, and on automation, and that gives us a real competitive advantage with respect to some of our competitors, our core business is still holding.

What feedback have you received from the co-founders?

Nandan (Nilekani) is a strategic thinker. I discuss various issues with him but he does not monitor day-to-day operations.

Has he talked to you about leaving the company?

I have not discussed it with him on this. He seems to be enjoying himself, the rest you ask him.

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