In­fosys wants to grow 16pc in 2016-17

The Pak Banker - - COMPANIES/BOSS -

Last week, at In­fosys Ltd's an­nual brain­storm­ing meet in My­suru, CEO Vishal Sikka played a game of cricket with his col­leagues, bowled a few sharp in­swingers (at 100 kmph, he was proudly heard telling one), and then, when it was time for more se­ri­ous busi­ness, told ev­ery­one present he wants to grow rev­enue by 16% next year (2016-2017).

To put that num­ber in con­text, In­fosys will prob­a­bly grow at 9.3% this year (end­ing 31 March), larger ri­val Tata Con­sul­tancy Ser­vices Ltd at 8%, and Wipro Ltd at 4.2%.

And Cog­nizant Tech­nol­ogy So­lu­tions, which has set the bench­mark in re­cent years, and which grew 21% in 2015 (un­like oth­ers, this Nas­daq-listed and US-head­quar­tered com­pany, which has most of its op­er­a­tions in In­dia, fol­lows a Jan­uary-De­cem­ber ac­count­ing year), said re­cently that it ex­pects to grow 10-14% this year. Nasscom, the soft­ware lobby group, es­ti­mates that the in­dus­try as a whole will grow 10-12% in 2016-17.

If the cricket is any in­di­ca­tion, the fun may be back at In­fosys, at one time one of the best com­pa­nies to work for in In­dia, ac­cord­ing to al­most ev­ery list­ing worth its name. And if the num­bers ma­te­ri­al­ize, In­fosys could well re­gain its stand­ing as the bell­wether of the in­dus­try. At My­suru, the com­pany also set it­self the in­ter­nal tar­get of grow­ing op­er­at­ing profit 27% in 2016-17.

The man­age­ment shared this as­pi­ra­tional goal with close to 1,100 ex­ec­u­tives at the end of In­fosys's an­nual three­day Strat­egy and Ac­tion Plan­ning, or STRAP, meet­ing in My­suru. The firm re­mains con­fi­dent of achiev­ing its am­bi­tious tar­get of hit­ting $20 bil­lion in sales by 2020.

To be sure, In­fosys's am­bi­tion of 16% growth in con­stant cur­rency terms is not the com­pany's of­fi­cial fore­cast, and the man­age­ment will cer­tainly be con­ser­va­tive when it gives the guid­ance in April for 2016-17, ac­cord­ing to mul­ti­ple ex­ec­u­tives. A spokes­woman for In­fosys de­clined com­ment, say­ing an earn­ings fore­cast will be de­clared only in April.

The 16% growth tar­get is not just an­other num­ber thrown at em­ploy­ees to boost morale like in the past, said a se­nior ex­ec­u­tive, who de­clined to be named as he is not au­tho­rized to speak to the me­dia. "Just in the last year, we have seen the whole com­pany work to­wards a goal of again cre­at­ing some­thing uniquely dif­fer­ent, and so, I re­main con­fi­dent that we will eas­ily record an over 12% growth in US dol­lar terms."

For now, Sikka's clutch of mea­sures to boost the morale of its em­ploy­ees and mak­ing many of them work more imag­i­na­tively than just merely writ­ing code is help­ing the com­pany. This has not just helped the com­pany ar­rest em­ployee at­tri­tion but even helped it grow faster.

In­fosys's ag­gres­sive out­look comes less than a week af­ter chief op­er­at­ing of­fi­cer U.B. Pravin Rao said in an in­ter­view that the man­age­ment's "new and re­new" strat­egy, if ex­e­cuted well, can help In­fosys grow up to 5 per­cent­age points above Nasscom's growth es­ti­mate in the next four years.

"We be­lieve it (sales of $20 bil­lion by 2020) is very much doable. We do not doubt and we be­lieve there is enough and more op­por­tu­nity for a com­pany which is not com­pla­cent, able to think dif­fer­ently, and ex­e­cutes this well," Rao said in an in­ter­view on 15 Fe­bru­ary.

To be sure, In­fosys's pub­lic fore­cast has not been even close to its in­ter­nal tar­get dis­cussed at the an­nual STRAP meets in the past decade and for this rea­son, the an­nual jam­boree risked los­ing its mean­ing. In Jan­uary 2014, In­fosys, ac­cord­ing to a se­cond ex­ec­u­tive, had given a growth tar­get of 26% to its ex­ec­u­tives in the an­nual meet, only to lower it to 7-9% growth in dol­lar terms when it gave its of­fi­cial out­look for 2014-15. Even­tu­ally, In­fosys man­aged to grow only at 5.6% that year. How­ever, since Sikka's ar­rival in Au­gust 2014, things have changed for the bet­ter. "STRAP event was fast los­ing its sig­nif­i­cance. It was no longer a brain­storm­ing ses­sion. Ex­ec­u­tives used to give in­flated growth num­bers and ev­ery­body used to be happy and go.

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