S. Gopalakrishnan | Weak recovery from economic downturn

S. Gopalakrishnan | Weak recovery from economic downturn

Infosys Technologies Ltd chief executive officer and managing director S. Gopalakrishnan spoke in an interview after the earnings were announced. Edited excerpts:

Double-digit growth after three years. You must be feeling good.

(The period) 2007-08 was (one) of high growth for the global economy. There was tremendous optimism. Today, the environment is challenging, we are recovering from an economic downturn, but it is a weak recovery. Volatility is high. There is liquidity, but that is because the government is trying to stimulate growth. This liquidity is leading to currency volatility. Even from a regulatory perspective, the environment is challenging as many of the developed countries are seeing high unemployment at about 10%, as opposed to 2007-08 where the unemployment was about 5%. It is satisfying to see this growth come back because it has given us confidence that this is a growth industry.

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We are much larger today, and despite that we are able to get 10% growth. In fact, the incremental revenue added this quarter is the highest in the history of the company at $130 million (Rs 572 crore) compared to about $95 million then.

Where do you see growth opportunities in the second half coming from?

We see growth across the markets where we are operating. About 87% of revenue comes from the US and Europe and that is very important for us. Financial services, retail, energy utilities are the faster growing industry verticals, while manufacturing, logistics and healthcare are slower. We are proactively trying to invest in healthcare, pharmaceuticals, life sciences and accelerate growth. In the near future, we expect growth from our four core verticals—financial services, manufacturing, retail and telecom.

What’s your strategy on acquisitions?

We are looking at smallish acquisitions. We have always stated that we will look at companies 10% of our size in our revenue which are manageable and do not increase risk.

We will also look at acquisitions which increase capacities and capabilities in markets and industries (in which) we want to grow faster. Our philosophy is to find the right company at the right price and the right strategic fit. We are not looking at hostile acquisitions.