iGate will continue to invest in the US: Ashok Vemuri3 min read . Updated: 22 Jan 2015, 09:24 AM IST
Vemuri said the company will continue to invest in existing and new applications
Mumbai: On Tuesday, Nasdaq-listed software services firm iGate Corp. reported a lower-than-expected net profit. In an interview in Mumbai after the company’s fiscal fourth quarter earnings announcement, Ashok Vemuri, president and chief executive, spoke about forex headwinds and investments in new technologies impacting growth, but was optimistic about a stronger 2015 based on strong client demand in the US. Edited excerpts:
Why did iGate’s gross margin drop during the quarter?
There was tremendous amount of forex headwinds in the quarter, which are in non-US currency, that is impacting margins. Secondly, we have been investing in our business; we had to do catch up with regard to our tools and methodologies, and build out our productized applications and value differentiators. Going forward into 2015, we will see a better realization of these investments which will actually feed into our gross margins.
Will you revisit your hedging strategy given the ongoing currency volatility?
We have a fairly strong treasury group and they are doing a fantastic job with regard to hedging. We are not a treasury or a bank; we are an IT services company, so there is only so much you can do from a hedging perspective. But we think we have a good hedging strategy.
How is 2015 looking and where would you be making your biggest investments?
The year 2015 is coupled with some amount of volatility in the European space. We are very confident, however, of how the US is shaping up because there is tremendous amount of investment happening in the US market across sectors and we are benefiting from that, so we will continue to invest in the US, in our digital practice, and in existing and new applications as part of our productized applications platform, integrated technology and operations platform (iTOPS).
What are the other countries and industries that are doing well for iGate?
Across the board in the US, all business segments are doing well. In Europe, we are seeing good traction in retail and the financial services space as well.
Can you elaborate on what exactly you would be doing around your digital practice and iTOPS (integrated technology and operations)?
On iTOPS, we essentially do analytics, mobility and the essentials to the digital experience like social, mobility, cloud, etc. We have identified two narrow areas (of focus)—namely, customer experience and content—specifically with regard to the digital area. With regard to iTOPS, it’s becoming more of an integrated service delivery platform—we have two very robust platforms on that—one for healthcare and insurance and the other for financial services companies. We are adding another three-four more of them in the retail, manufacturing space, etc. The monetization of our iTOPS story will only get stronger with the passing years.
Why did you change your hiring strategy from just-in-time, or project-based hiring, to hiring for growth?
You cannot be hiring just in time because the client demands that you have a well-trained team and it’s important to hire in advance for growth, because a lot of the way technology is getting consumed and changing, requires us to invest more time in training employees, which is why we set up iGate corporate university; which is why we hire ahead of the demand to be ready for the business when it comes. However, hiring is coupled with new technology like automation, and digital which requires more on-site hiring and even though it’s a small number, we expect our hiring numbers in 2015 to be slightly lower than 2014, or comparable to that. The business teams are currently putting the numbers together.
Are you looking to engage with start-ups actively with say a start-up fund, similar to what your peers are investing in?
We look at ourselves as a start-up and so we are investing in ourselves.
In the little over one year that you have been at the helm at iGate, what are some of the key changes you have made and any ideas that you borrowed from Infosys?
I spent 15 years at Infosys, so I am probably borrowing things from Infosys subconsciously. But iGate is a strong, independent company, it has its own capability, a very strong base of clients and leaders and all that I am essentially doing is participating with them in driving the company in the right direction.