Slowdown in discretionary spending likely a one-off: Infosys CEO

In an interview with CNBC-TV18's Rukmini Rao, Infosys CEO Vishal Sikka talked about the company's muted first quarter earnings and what he expects going forward.Below is the verbatim transcript of Vishal Sikka’s interview to Rukmini Rao on CNBC-TV18.Q: In your initial comments, there is also mention of slowing down of the discretionary spends and also slowing down of the ramp up of certain projects. Is this a one-off thing or is this is a continued pressure that will be seen flowing into the next three quarters as well? A: So far it seems to be a one-off thing. It is not overall slowdown in discretionary spending, it is discretionary spending that we saw slowing down in certain areas, in packaged services and consulting services. I don’t believe that this is something broader than this. This is something that is in some ways related to the client situation and of our own making and this is something that we will address as we move forward. Q: Also lowering of the guidance has been something that the market has been worried about. Is this indication of how the business is going to look like for the rest of the year? Do you think that once there is chance of revival, there could be an upward guidance that you could look at?A: As the situation changes, we are going to constantly monitor it. Our goal always is to provide guidance to the market based on our own visibility and the more that we see, that we will obviously be in touch with the market on that. At present, based on what we have seen, roughly we see a 1 percent decline and that is what we have guided on and that is 10.5 percent. Instead of 11.5-13.5 percent we have brought it down to 10.5- 12 percent. Q: Also in terms of the large deal wins, I wanted to understand from you where does it stand and also what is the deal pipeline looking like? A: In Latin America, we have been doing extremely well. We did USD 750 million or so in quarter before in Q4, in our fiscal Q4 and fiscal Q1 we did a little bit more than USD 800 million. This number has also quite encouraging. Our goal is to get to a USD 1 billion in TCV in every quarter and we are getting close to that. So, I am excited about that.Q: Also in the top ten clients we have seen jump up in the revenue, is this largely because of your own involvement in the top 10 clients?A: That is not a very scalable model but in areas where myself and we have a core team that works closely with the top clients and we review the work that we do there. So, that has been growing quite well and that has been happening in fact over the last four or five quarters. So, I am very encouraged by that but we now need to bring that same kind of rigor and attention and quality of work to the tier below the top 25 as well.Q: Also I want to understand from you in terms of lowering of the guidance have you actually included the Brexit impact and also going ahead on a long-term basis what is Europe looking like for Infosys and is there real fear of any untoward outcome of Brexit for Infosys?A: It is too early to tell what the Brexit will do. We can safely say that, look Brexit is about a creation of walls about more isolation, which is unfortunate as a society. However, when you look at it from an IT perspective or from the services perspective the isolation actually creates significant opportunities to make system more inter-operable, to integrate systems, to create more transparency, regulatory environment across boundaries and so on. So, there is a lot of system work, IT service works that needs to be done in that kind of a situation. However, that will take longer time. In the near-term the impact of this is not known. We none of us knows yet so therefore it is not factored into the guidance.Q: We did see the stocks actually tank toady after the results came out is that a bit of a worry for you?A: Our goal is to provide as much information and visibility to the market as we can and then market reacts the way they react. Our duty to the shareholders is to ensure that there is as little asymmetry of information between us and the shareholders as possible so therefore we tried to do the right thing.