'Nothing to worry, Infosys is in a comfortable position now'

'Till you get back to the industry leading growth, it’s too much of an arrogance to call yourself a bellwether.'

'As a company, we have a healthy leadership pipeline.'

'By and large, we don’t anticipate any dramatic changes.'

After lying low for some time, Infosys is back in limelight due to better-than-expected financials in the past couple of quarters.

The management is much more confident today than in the recent past, under the leadership of chief executive Vishal Sikka.

The Bengaluru-headquartered company’s chief operating officer U B Pravin Rao, below, tells Business Standard how it is executing the strategy, and how far it is behind to regain the bellwether status.

Edited excerpts:

When senior exits at Infosys were more or less contained, we saw Rajiv Bansal (ex-CFO) leaving. Now, there is a rumour that you have decided to leave. How true is this?

I have been hearing this (about me leaving) for the past two years. I have no intention (to leave).

About Rajiv (Bansal), obviously it’s a large organisation and sometimes, people at some stage of their career, evaluate their priorities.

Rajiv has got 15-plus years of career left. So, he had to take a call whether he wanted to be part of Infosys for the next 15 years or look for different opportunities.

But you have been here all along

Yes, this is my first job. I am close to retirement age now.

So, the priorities are different.

The reality is, even when I look back at the earlier years, there have always been senior people leaving at some point of time for different career options.

As a company, we have a healthy leadership pipeline.

In some sense, sometimes these rotations also help in the long run because we are able to promote the next level.

So, it’s not something over which we are losing sleep.

So are you saying, you are going to retire from Infosys?

Yes. I will retire from Infosys.

How is your leadership pipeline now? After Matt Barney quit two years ago, you don’t have a leader to manage the Infosys Leadership Institute?

ILI is still there. We still have an opening of a leader there.

Given all the changes that were happening at Infosys in the past two-and-a-half years, from priority perspective, we decided to defer getting a new leader at ILI.

Now, we have started looking out.

We still have robust leadership development programmes.

We have partnered with Stanford Business School to train 300-400 of our identified leaders for three years.

We have internal programmes where senior leaders train the next line on various subjects though talk shows, video and training.

You have done away with the Bell Curve model of evaluating employees. What triggered this?

This was one of the many changes we have effected with regard to people model, experience and productivity, as was proposed by our SWAT team, which we formed almost one year ago.

The Bell Curve or Forced Rating model of evaluating people, of late, had drawn quite a lot of criticism from various circles.

Now, we will evaluate people based on their absolute rating and that would be used for determining compensation hike, promotion, etc.

If there is a situation when, in a particular cycle, 50 per cent of our employees are found as outstanding performers, we are pretty much okay with that.

Whereas, in the past, because of the Bell Curve, we would have said only 25 per cent could be outstanding, and then we would have to do some more filtering.

Many people expect the Q3 to be a softer quarter. What is your observation?

There is a seasonality in Q3.

In the past, furlough was predominantly confined to the manufacturing segment.

Also, in the past, when we had a lot of wins in Q1 and Q2, the momentum used to carry forward in Q3.

But, unfortunately, there is tremendous pressure now on taking cost out of the system. So, we are seeing this concept of furlough getting extended to some other industries that we had never seen in the past.

Hopefully, we should get the momentum back in Q4.

During the past quarters, Infosys had been adding a lot of clients  compared to the past. How have you been able to cultivate those?

Overall, a big percentage of revenue will continue to come from the existing client base.

If you look back to the past 20-30-year period, you will see every year only two to three per cent of revenue came from new accounts.

At the same time, these existing accounts would reach a plateau at some point of time.

That’s why, opening new accounts is critical and if we are able to engage with them better over a period of 18-36 months, they will start becoming growth engines when some of your existing accounts become flat.

Clients finalise their budgets towards December time frame every year. What’s the kind of indication you are getting from them?

It’s still early to talk about that.

But historically, what we have seen, at least in the past one or two years, is that budget in some sense has been flat as a percentage of revenue.

I don’t think anyone is increasing their spend in information technology; they are only repurposing the allocation.

By and large, we don’t anticipate any dramatic changes.

When do you expect Infosys to regain the IT bellwether status?

This is a term which is used by the market, not us.

There are some reports which say the industry growth may come down this year.

We don’t know.

But based on what National Association of Software and Services Companies has said, probably we won’t reach the industry average. 

So, till you get back to the industry leading growth, it’s too much of an arrogance to call yourself a bellwether.

We have to get back to where we were earlier; we have to become a lot more predictable.

But we are comfortable where we are.

Image: Infosys campus. Photograph: Reuters