India’s Infosys accepts it is pursuing conservative policies

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Chief Financial Officer V. Balakrishnan (left) and S.D. Shibulal (right), CEO and Managing Director of Infosys Limited at the Infosys headquarters in Bangalore, India. Photo - AFP

Experts have always accused Infosys of being conservative in its approach, though top management of the company has always denied it. However, now it seems like the trend is changing with chief financial officer V Balakrishnan announcing in media that some sort of conservatism has indeed crept into Infosys, especially during the last year or so.

Talking to media after Infosys’ comparatively poor financial performance, Balakrishnan, also an Infosys board member, defended the guidance as being ‘very realistic’.

“Of course, there is some amount of conservatism built in. When you are coming out of a tough year and a tough quarter, it is natural to build some conservatism. But, I don’t think our guidance is totally conservative,” he said.

In terms of statistics, the company says it achieved a 8-10% growth in its revenues as against the general belief of 12-15%. On an expected note, the market reacted sharply, as it was much less than the growth outlook of 11-14% given by Nasscom, the IT industry body.

Balakrishnan said the guidance was a ‘statement of facts’ on the basis of how clients were expected to spend their money. Due to the volatile environment, Infosys visibility of its clients’ spending for the complete year has witnessed a dip of 65%, as against the earlier 70-75%. On the other hand, the short-term visibility, he says, is still better at 95%, even though the value of the five per cent invisible part is quite substantial taking into consideration its revenue base.

When asked by newsmen if he is concerned about Cognizant overtaking Infosys in revenue, Balakrishnan was non-committal. “They have given the guidance. They have a set of customers; they might be seeing different things in the market. We can only talk about ourselves,” he says.

Balakrishnan said high-quality growth helped in giving better revenue productivity, which in turn lead to better margins, enabling the company to pay more salary to employees and attract talent.

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