'Campus offers, the real challenge for Infosys'

There was a time when Infosys Technologies, India's second largest software exporter, wanted to reduce its overdependence on the North American market by increasing its revenue from Europe and the rest of the world. The economic uncertainty in Europe is forcing a strategy rethink. 'Kris' Gopalakrishnan, CEO and MD of the Bangalore-headquartered Infosys spoke on key strategies the company is adopting to tide over the rough times. Excerpts:

Has the scenario changed for the better in the last one year?

Well, even though a lot of things have changed in the past year, uncertainties continue. Given the size of the company, given the number of people we need to recruit, the ability to forecast accurately will ultimately decide what our growth rate will be.

We are recruiting people because things are more in our control in the short term and we will be able to grow very well with our clients.

Nobody is being able to predict right now where the global economy is headed in the next 12 or 18 months from now. Besides, in the medium to long term, various macro-economic factors will impact us much more and our ability to forecast where that is going to be, is for now, limited.

Even though we are investing in recruitment, visas and infrastructure, our ability to forecast is limited to the next 12-18 months.

The real challenge will come when we make campus offers without long-term business visibility. The medium- to long-term challenge faced by forecasting could affect our confidence in going aggressively for campus recruitment and capacity expansion.

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What has been the impact of the European sovereign debt crisis on Infosys?

The direct impact on us has been small because our exposure to countries like Spain, Portugal and Italy is minimal - they constitute less than 1 per cent of our revenue. The impact on our clients is also minimal because their own exposure to these markets is also limited.

How do you plan to maintain your growth curve in Europe?

The focus is going to be on acquisition of new clients in this region. We are actually broadening our footprint in these markets. When these new clients grow, we will manage to see an overall growth. So, growth will primarily come from new client acquisitions, and in some cases from existing clients.

Europe has been slowly declining for us during the the last 2-3 quarters. US went into recession first and Europe took probably six months more. We expect Europe to recover more slowly than the rest of the world. Also, when the recovery happens, growth will be muted.

We are open to carrying out acquisitions in Europe. We are proactively investing in France, Germany and expanding our footprint in Europe. We have said in the past that our typical investment on acquisitions will be in the range of $300 to $500 million.

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What are your clients telling you?

Investments are back. We are seeing clients investing for growth and a better future. Regarding client budget spends, it depends from company to company.

We believe that in North America and the rest of the world, there will be growth for IT companies because budgets are going to be higher and the money will be spent. In Europe, even though clients have finalised their budgets, money might sometimes not be spent because they are going to be cautious.

What does your pipeline look like?

Very good, and that's the reason why we are seeing significant opportunities for growth and investing heavily on people and infrastructure.

Sectors like BFSI, retail and manufacturing have done extremely well in this quarter and we are hopeful of clinching newer deals.