S. Gopalakrishnan, known as Kris to his colleagues, is one of the seven founders of Infosys Technologies Ltd. Mr. Gopalakrishnan took over as chief executive and managing director of the company in June 2007. Mr. Gopalakrishnan has helmed Infosys at a time when the Indian software industry is going through its worst phase since the dotcom bust. He has seen Infosys evolve into India's second-largest software exporter by revenue and he is part of the core team that is setting the agenda for India's bellwether technology companies. His leadership skills will be tested when the Bangalore-based company, listed on the Nasdaq and Indian stock exchanges, is looking to make strategic acquisitions to grow in emerging markets, while reducing its reliance on the key U.S. market.
What is your vision for the company and how do you plan to achieve that?
Mr. Gopalakrishnan: There are two parts to the vision. One, we need to expand our footprint outside India from a market perspective -- so we are investing in Europe, Asia, Middle East, South and Latin America. We have plans to recruit 1,000 people in the U.S. Already about 140 offers have been made. Seventy have joined. ... In a quarter we are looking at about 250 people. Over time we see about 15% of our employees as non-Indians. The second dimension is to invest in research, development and recruiting the right people.
How has Infosys been impacted by the recession?
Mr. Gopalakrishnan: We have been able to maintain our margins and even add our employee strength. So, in spite of growth coming down to almost zero -- this year we are looking at almost zero percent growth -- we have been able to make the investments required and sustain our margins. Hence, I believe that we are emerging out of it stronger.
When do you expect to regain historic growth levels?
Mr. Gopalakrishnan: We don't know whether it will come back to old levels. What we are seeing from projections is that it is possible for the industry to get to double-digit growth rate -- between 10% and 20%. I think the recovery of the economy itself would be sufficient to reach this growth level. There are already signs of that.
You have almost $2.8 billion in cash. How do you plan to utilize this cash?
Mr. Gopalakrishnan: One of the reasons for that cash is acquisition. It gives you the confidence to make an acquisition happen. But we also believe that we must be able to run the business with no revenue for as long as a year.
We are looking at acquisitions in non-English speaking markets like Germany, France, Japan to accelerate growth and get new capabilities. We are not looking at acquiring a business and cleaning it up and making it profitable.
What is the size of the acquisitions you are looking at?
Mr. Gopalakrishnan: Ordinarily we look at a company of 10% of our size. So I am talking about revenue of maybe $300 million to $500 million. But, if a great opportunity comes, we would look at it. And the cash will definitely help.
Would Infosys be an acquisition target?
Mr. Gopalakrishnan: If you are a public company you are always an acquisition target...With founders holding probably a 16.5% stake, today potentially we can get bought out. If the company is well run, the likelihood of getting acquired is less.
You are one of the last from the core founding group to head the company. Do you have a succession plan?
Mr. Gopalakrishnan: We have a robust succession plan in place. I see most of senior positions filled -- let's say 90% to 95% senior position filled -- from within the company.
How do you view competition from China? There's talk that outsourcing could move from India to China in the future.
Mr. Gopalakrishnan: It is not a factor today. Maybe 5 or 10 years down the line it will be. But right now the competitive dynamics has not changed that much. It is still the same set of five or six companies that we compete always in all markets. A few from India and a few from outside.
Where are your fastest growing markets?
Mr. Gopalakrishnan: India is doing well for us. In China we have some challenges. We don't have enough to show our capability in that market. So our brand is not yet there. It will take some time.
Why is Infosys conservative in its outlook on client budgets, while others are not?
Mr. Gopalakrishnan: Better is a relative term. The budgets this year declined by 6% to 8% from last year, according to analysts. So being flat is better than declining. We are not overly optimistic at this point because the uncertainties in the market have not gone away. It is better to be cautious. I would not call it conservative.
When do you see that kind of confidence returning?
Mr. Gopalakrishnan: May be a couple of years. It is positive if it happens before that. But it is better to be cautious.
But you have been optimistic about the pricing environment?
Mr. Gopalakrishnan: We are optimistic. The bottom has been reached and recovery has started. Pricing also continues to be stable. But, we don't see pricing power returning.
What about business volumes?
Mr. Gopalakrishnan: That is where the growth will come from, in the next fiscal year also. Whatever growth will be, will come from volumes.
From: wsj.com
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