Infosys wants to grow 16pc in 2016-17
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.