Hindustan Times (Jalandhar)

Infosys results show rosy mood, but new wave is yet to come


“The quarter is a volatile animal,” Infosys CEO Vishal Sikka declared on Tuesday after his company reported better-thanexpect­ed first quarter results for April-June, sending its shares surging by about 11.5%.

His modesty is understand­able. Infosys is going through a profound turnaround after a chequered few years in which its own management challenges were compounded by a global economic crisis and tectonic shifts in technology and business models of the IT service industry.

Infosys is trying to do better the stuff that helped it grow big (cost-efficient coding and services) while trying to touch new frontiers (innovation and digital transforma­tion using intellectu­al property) because the old tricks will not work anymore if it wants to stay a leader.

Q1 revenue for Infosys grew 7 per cent on the quarter – the highest in 15 quarters. Year-on-year growth was 12.4% in revenues. Revenue growth is expected to maintain the pace through the year. Not bad at all.

However, most of the topline growth came from volumes that grew 5.4% — the highest in 19 quarters. The company attributes this to an “organisati­onal realignmen­t” announced earlier this year. Large client additions helped keep the mood up.

The acquisitio­n of 200-employee-strong Pranaya from Israel, which provides value-added services, gave new deals.

But the point to note is that the handsome numbers are by and large more from better management and probably, a bounce-back in the US economy, the biggest market for the export-oriented IT service industry.

To the extent that new initiative­s centred around innovation have helped growth, you could say that the new wave is gaining ground. But the best may be yet to come, with a long way to go. That should explain Sikka’s down-toearth comment.

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