Infosys confident of reaching FY16 revenue target

CEO Vishal Sikka says deal pipeline looks strong, win rates better

Infosys, India’s second-largest information technology services company, on Thursday said it was comfortably placed to achieve revenue growth guidance for 2015-16 on a better deal pipeline and increasing interest in its offerings.

Speaking at a conference organised by investment advisory firm Cowen & Company, Vishal Sikka, chief executive officer and managing director of Infosys, said recent initiatives had started yielding dividends.

“We have done a significant amount of work in improving the operational efficiency in the company in terms of bringing consulting as the tip of the sphere for the whole company; around better managing the top 15 accounts directly from the office of the CEO; and centralising the way we do proposals and strategic sales and bid RFPs,” Sikka said in New York.

“We have seen an improvement in the (deal) pipeline, so we feel confident about (achieving) the 10-12 per cent growth at constant currency this year,” he said. “Many of the effects of automation and next-generation works as well as the acquisitions we have made will start to kick in towards the second half of this year,” he added.

After assuming the charge at the Bengaluru-based company in August last year, Sikka, a former executive board member and chief technology officer at German enterprise software maker SAP has taken a number of initiatives to address the declining market by harping on opportunities that are expected to impact the buying behavior of the global clients. The initiatives however have not made its impact felt in the short-term as the company's performance in the quarter and financial year ended March 31, 2015 was disappointing.

Sikka said he is not seeing anything unusual in the ongoing quarter. "In the last quarter, there was some amount of aberrations, both from the perspective of the changes that happened in the industry as well as some of operational weaknesses that became apparent to us."

The Infosys CEO said that the company's aspirational goal of reaching $20 billion is quite achievable given the strategy it has put in place. During its recently concluded earnings conference, Infosys had announced its goal of touching $20 billion in revenues with an operating margin of 30 per cent in the year 2020 by which it said it was expecting the revenue per employee would increase to around $80,000.

Sikka said that the break-down of the revenue target is quite realistic and achievable. Of the $20 billion, Infosys expects 10 per cent would come from newer areas and $1.5 billion from inorganic means. The remaining $16.5 billion, the company said, would come from the renewal of existing services. In FY16, the company reported revenues of $8.71 billion.

"I think the first important thing is we have to identify opportunities, given the renewal of the enterprise legacy landscape and the operational efficiencies that the businesses need to achieve. And in parallel to that renewal, the new things that the enterprises are required to do to connect with the world outside and to better understand their customers, a $20 billion in revenue for a next generation kind of services company is eminently doable," he said. "There is a massive opportunity for these kinds of things for the foreseeable future. So therefore, in principle, $20 billion is not a very large number to achieve for a scalable business."

With an aim of improving its operational efficiency and enhance its intimacy with the top and strategic clients, Infosys has recently decided to manage the top 15 accounts from the office of the CEO. Besides, it has also identified a team of 100 senior partners from its consulting team and given them the charge two clients each to better understand and mine those accounts in coordination with the sales and delivery team. Similarly, the company has also centralized the team which develops request for proposals (RFPs) and bid documents giving the charge to a design expert with an aim of clearly articulating its offering using narrative and storytelling techniques.