SD Shibulal | When we make an acquisition, we want the leadership to stay

SD Shibulal | When we make an acquisition, we want the leadership to stay

Bangalore: This is S.D. Shibulal’s first quarterly earnings announcement as the chief executive officer of Infosys Ltd after having taken over from Kris Gopalakrishnan.

The good numbers have put a smile on his face, and in an interview he reiterated his confidence in the company’s new strategic direction and what it’s looking for in the much-watched acquisition hunt. Edited excerpts:

The second quarter has always been strong, and after last year’s Q2, there was even a sense of elation that the slump was behind you when you posted double-digit, $100 million growth in Q2 last year. While numbers have been good this time too, if not as good, there is an element of caution.

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Yes, the environment has changed again. In the US, the financial sector is still facing challenges and in the euro zone, there are crises. So we are cautious. But even in this environment, we have done well, with good volume growth and growth across verticals. Client spending is very different. They are spending in small pieces. There are delays in larger investments.

You are still confident of volume growth and have guided for it, but you don’t anticipate an impact in later quarters?

Our strategic direction, where we’re giving thrust to consulting, business transformation projects, and products and platforms, and emphasizing value and partnership with our clients, gives us a lot of confidence. Our “consulting revenue" is over 30%. (The industry standard is to report pure consulting, package implementation and system integration as “consulting revenue", so we’ve started doing that from this quarter onwards.) In the medium to long term, we are very confident. (In the) short term, we might face challenges. Our guidance is based on the facts now as we see it.

You have indicated that you might make acquisitions in both consulting, and in products and platforms, where revenue is still under 8%. What are the key tests a potential acquisition has to pass before you think it is a strategic fit?

It has to be aligned to the strategic direction we have outlined. It must be synergistic. Then there must be a willingness to be acquired, we want the leadership to stay. We are not in the business of aggressive acquisitions. In the services business, for an acquisition to work, the people there must be committed. We are not in the business of taking over a broken company and trying to fix it. Then it must be in growth markets and be profitable. We are also looking at geographical gains when we make the acquisition.