Jul 12, 2013, 04.08 PM | Source: CNBC-TV18

Expect attrition rate to fall in next few qtrs: Infosys

SD Shibulal, MD & CEO at Infosys is a pleased man after the IT bellwether surprised the street with better-than-expected numbers. He confirmed that responsibilities of Basab Pradhan, who left the company recently, have been given to Ashok Vemuri.

SD Shibulal, MD & CEO at Infosys is a pleased man after the IT bellwether surprised the street with better-than-expected numbers. He spoke to CNBC-TV18 about rebuilding the company, management reorganization and filling vacancies created by high-level exits.

He confirmed that Ashok Vemuri has taken charge as head of global sales after Basab Pradhan's exit. Pradhan had recently quit the company to explore opportunities elsewhere. Infosys has always seen high attrition rate in the first quarter but the company hopes to see a reduction in the coming quarters.

The company announced its first quarter numbers today following which the stock rallied 15 percent.

Below is the verbatim transcript of Shibulal's interview:

Q: Let me start by asking you about what happens from hereon because the last conversation that we had you said it will take a couple of years to actually rebuild Infosys and you didn’t specify very much then. Let me start by asking you about the top level exit of Basab Pradhan, have you found a replacement for Basab yet?

A: Before I answer that let me give you a broad overview of Q1. We have done reasonably well in Q1. We grew 2.7 percent. Constant currency we grew by 3.4 percent and we have seen growth all around. Our topline grew by 11 percent, our top 10 grew by 4 percent, our top 25 also grew by about 1.8 percent and our large deal wins in Q1 has been pretty good. We have won seven deals of USD 600 million in TCB. So, from a margin perspective we have remained stable, 23.5 percent quarter-on-quarter (QoQ). Now, let me answer your question. Your question was about exit of Basab Pradhan. As we said he has resigned to look for exploring opportunities outside. Ashok Vemuri has taken charge of Basab's portfolio in the interim.

Q: So, you are confirming that Ashok Vemuri has taken over charge from Basab Pradhan but that is only an interim measure?

A: It is an interim measure. We will come up with plan for the long-term in the next couple of weeks.

Q: What else can we expect in terms of management reorganization because the last conversation that I had with you and Murthy you did allude to the fact that there will be changes that we will perhaps see on the sales and marketing side and other management changes as well? Besides Vemuri taking over from Basab Pradhan what else can we expect now in terms of the management reorganization?

A: As I said that Ashok Vemuri taking over is an interim measure. We will look at long-term pretty soon. I can tell you one thing, you will be the first to know as and when we make those changes.

Q: There has been a lot of speculation over the last couple of weeks on Infosys being on the prowl looking at acquisitions specifically domestic acquisitions. Is there any truth to those rumours I don’t want to name those companies but you perhaps know who I am talking about?

A: Let me not respond to rumour. At the same time, acquisition is strategic for Infosys and it has to be an acquisition which will put two and two together and create five for our clients. We have done one Lodestone; it seems we are on plan. The integration is in progress and so far it seems to be doing well and on plan.

Q: Can we expect an acquisition from Infosys perhaps as early as the coming quarter in the domestic market specifically?

A: As I said acquisition is strategic. You will be the first to know as and when we do it. Acquisitions are long-term processes, they are not short-term.

Q: We are seeing a lot of churn as far as the IT deal street is concerned. You have actually been able to bag about seven clients that you just talked about in excess of USD 600 million. Are we likely to see more additions on account of the kind of churn that we are seeing in the IT basket there?

A: These are not seven clients; these are seven deals which we have won in Q1. If you look at the last three quarters and that means the second half of last years, we have started seeing good wins in the business and IT space.

In the second half, we had won about a billion dollars of revenue and this quarter we have won about seven deals of USD 600 million. But it is very important to note one thing; these are long-term deals i.e. 3-5 years. So, if you win a billion dollars, it will only give you about USD 200 million in the second year.

Usually, your realisation in the second year is only 20 percent. Going back to your question, it is true. If you read the industry reports, a very large portion of the outsourcing deals are rebids and generally they tend to be price sensitive.

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