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B.G. Srinivas | Europe is a challenging situation

B.G. Srinivas | Europe is a challenging situation

B.G. Srinivas, newly inducted onto the Infosys board, heads the manufacturing vertical and the Europe geography for Infosys. Europe is still a challenge, but clients are still “reasonably steady" and looking for new growth avenues. Budgets are stable and deals are closing, he said in an interview. Edited excerpts:

Is Europe a bit of a struggle?

It is a challenging situation, but serious steps are being taken on collaboration. No one is in panic mode. Nobody can guess what might trigger that though. Our own client businesses are steady. Growth rates might not be significant, but it is there, and deals are closing.

Are large deals happening?

Sure, we just closed one beginning of this month, a transformational deal in manufacturing, which will be reflected in the current quarter results. Plus, there are two more in the pipeline. These are in the $20-50 million range. The projects cover process harmonization, standardization, reorganization within themselves, rationalizing product and service lines, moving towards solutions from just products, and so on. The telecom deal we mentioned, in the wireless space, also happened here in Europe. There is significant revenue attrition from one large client, and that has not stopped. If you remove that and normalize, growth in Europe is on par. On discretionary spend there are issues -- the continent is slow, while the UK is closer to the US in behaviour. There is variation across sectors, with financial services quite normal in terms of decision making, and vendor consolidation is happening, again a very UK phenomenon. On the continent, there are opportunities in manufacturing, energy utilities, CPG (consumer packaged goods) companies and pharma.

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What are the opportunities in manufacturing?

Globally, manufacturing is steady relative to the macro environment. Business growth varies, in automotive it is reasonably good. Energy, power, utilities are looking up. Discrete manufacturing is stable, not taking off. Manufacturing grew 4% sequential, and overall it is 20% of our revenues.

There are opportunities in the automotive sector and the high-tech sector in the US. The sector should grow in line with guidance. There are also opportunities in the engineering sector, in core engineering and equipment. From a service line perspective, there are opportunities in consulting, package implementation, and engineering services, more to do with embedded software and product development.

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