Infosys will recruit 55,000 college graduates around the world this year: Salil Parekh, CEO & MD, Infosys

Salil Parekh, CEO & MD, Infosys, talks about his journey at the helm at Infosys, growth drivers and opportunities, competition, profitability, margin, goals, promising verticals and geographies, M&A opportunities and Metaverse among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: Let us go through your journey of four years at Infosys?

A: Infosys has always been a pre-eminent top-level company. Something that we did jointly with the whole team is that we had a focus on What Do Clients Look For, i.e., what is the need of the clients. And over the last few years, clients are mainly looking for digital transformation. I would like to share two to three points on digital but after that, we put in place a tremendous focus on building all the capabilities like cloud, data analytics, cyber security and the internet of things (IoT). We built tremendous capabilities in this, in fact, we have built a digital studio on this campus and there we can design things for the new technology that normally belong to IT but to design. So, that was the first big move that we put in place and it was to make it digital. Interestingly, today, the company has almost 58% turned digital from 25% in FY20. Digital growth has crossed the mark of 40%. So, those are the good things that we are seeing.

The second focus area was on re-skilling our people/employees. The main issue is that technology is changing at such a great place that everyone needs to re-skill constantly. For this purpose, we have created a platform and we call it Lex, internally. The Lex platform is available on your mobile and if I need to learn something about the cloud from COBOLT then I can learn it from my mobile and it is for all our employees. So, 28,000 we have on our mobile and we can take three to four weeks to learn that and then get certified. What is happening from it is that everyone is jumping in and deciding themselves what they want to learn and are being digital-ready more. At Infosys, we always had a very good training campus in Mysore and we have three month and four-month programme, where we take college graduates. So, those always continued, of course, it was differentiated during the COVID as everything moved on work from home. 

The third thing we did is we got the automation done, i.e., go to a large client, they have a large landscape of IT and how we can make things more efficient in it. In automation, we use artificial intelligence and machine learning. We have our own tools that we have built for automation. So, it reduces their cost to automate, they can use that to build digital. 

So, first digital, re-skill, automate and then really the foundation of all these - the concept we have built is one Infosys, i.e., everyone is working for the benefit of the client. In big companies, many different groups and divisions are doing very good work but to bring it all together is a real key. To bring everyone together, we have regular sessions, even in COVID, we had a lot of Zoom sessions, daily calls, bring in people together. 

Q: You have talked about the four things that you did in this period thus the fundamentals are in place now. Do you want to say that all are fixed and the worst is behind you?

A: Worst is definitely behind us and always we are looking at improvement. We gave guidance just now of 19.5% to 20% and our growth in Q3 was 7% on the quarter and 21% on the year. So, things are looking in good shape for us, fortunately. We are now always looking at what else can we do in the future and for us, the future is looking very optimistic. 

Q: You are quite optimistic. Let us know where is this optimism coming from and what are your growth drivers going ahead and where do you foresee opportunities and business and operation wise, where you think that you can really make a difference?

A: What is happening is that the focus we look ahead to now is more and more on specialised areas even within in digital. For instance, we are doing a lot of work on the cloud and what has happened on the cloud is that we have built a set of capabilities called COBOLT (Cloud-Based Enterprise Transformation Services) and we have also released it in the market. We were the first company in our peer group to have built something like COBOLT. In COBOLT, we have got 300 industry templates, 30,000 objects, so, if you want to use the cloud for your company then you can come to Infosys and say help us. We can use COBOLT and you can go faster because things are ready or your risk is reduced because things are being tested before. So, this makes a huge difference in the market. What is happening in the cloud is that we are working on public cloud, private cloud, Software as a service (SaaS), cloud-native, so, we have a fully comprehensive area and if our digital has grown 40% then cloud is growing even faster, which we are not giving publicly the number at this stage but that is what is giving us the growth today. So in April 2022, after the end of this financial year, we will give some views for the next year but we can see the budgets and the good share with the clients. The traction for cloud is doing good, so, we feel quite positive that if we continue to do so that it will remain a quite good story for us. 

Q: It seems that you have the first-mover advantage on the front.

A:  Yes, we are the first people who put that in place. 

Q: You have said that digital transformation was the biggest turning point for the company. But always there is a question that you are doing well and yes there are other so many companies who are coming now including the mid-IT companies and they are growing massively, which means there are huge opportunities for everyone to grow. But does it mean that will they take away a certain percentage of your market share including the movement of a few of your clients, if yes, how big is that concern for a very big size company like yours?

A: Your point is quite valid. We have, now, taken market share from others, so, what is happening is that if you take our growth guidance of 19.5% to 20% for the year then this is well ahead of where the industry average growth is. So, there are many people because it is a global industry, who are losing the market share and today we are gaining the market share for that. Now, what is happening, for instance, about three-four weeks ago, we discussed with a client who is working with another large provider, a very well known company but during the COVID for whatever reason, they were not able to make such deliveries. So, the client's CIO was saying that we want to shift 2,400 people to you and that too is just a shot. It is not such that we went to them and said please provide it to us but we are quite keen in doing it, but what is happening is that we are gaining that sort of market share today. As far as our growth is concerned, we are very focused on large global companies, it is termed as Global 2000. We work almost exclusively with them and in that domain, we believe that there is no one growing faster than us. Yes, there are other places, like today we are not doing so much in the medium company among others, so, there are other people who are working there. There can be a demand but we are focusing on Global 2000 as they need to remain steady for years. So, what we are doing is that we are making sure that we support them through that need for technology. The different parts of the market are moving high at times and low at times but this remains very strong. That is also what Infosys was built on and one of the things that we have done is to make sure that we have kept all things that were good about it and then added some more things. So, this ongoing relationship is further cementing those relationships. 

Q: How will you maintain profitability and margin as the market is very competitive?

A: In the last quarter, we had a margin of 23.5% and our guidance band has remained steady at 22%-24%, we have constantly focused on that because when you have such a large delivery engine, there are many levers that we can use, which can give us some benefits. There are some areas, which are coming against the margin because last year, we have done foreign employees significant compensation increases, of course, there are other areas that come into play when we look at what sort of investments we made. There again there are areas where today we are seeing as the digital work, clients are looking at that as giving them more value. So, we think that over time, we will be able to convert that into more for Infosys and that will be positive for us. We think, over time, we will be able to be more efficient in delivery as automation will be there more and more. So, there are some areas, which will give us margin support and other areas which will help in making sure that overall the company is working well. But we are very comfortable today to stay in this 22%-24% band. 

Q: When your talk about 2025, goals still have to be achieved of what you have set out. Where are you on that journey and how much more time will be required to reach there? Do you think that the way you are growing at present, you will be able to achieve the target before the set time?

A: What we have achieved is now we have gone a little bit faster than what we originally anticipated but looking ahead, now we are just setting this quarter, the plans for the next five years. So, things will be set and we are having discussions with the board and our leadership and then we will internally roll it out in the next six to nine months that what should be done. It is very clear to us that we want to be close to our clients. What should be done in it is that the portfolio has to constantly shift. So, the needs of the clients are cloud and digital at present and it can be something else the next day like the Artificial Intelligence can increase, we can do more and more things on IoT. Thus, we don't know which could be those areas, which will keep on turning. So in that, we have the plan to make sure that our portfolio is kept shifting like we have 58% of digital, we will keep shifting to what our clients are looking for and if we do that well and execute it then we will remain at the forefront of the growth. The idea is that our market share should continue to grow, meaning our growth is ahead of where the market is and that we believe the goal is. It is not such that after these many years this should be the number. It is more than this, portfolio shifting should happen and we should keep growing at a faster pace. 

Q: What are going to be important and promising verticals and geographies for you and what role Infosys will play in it?

A:  Last quarter, we saw that Europe was doing faster for us than the US. Both were over 20% but Europe was faster. We saw manufacturing growing very well. As we look ahead, financial services are the core of the company that will continue to do well. So, we have a very good presence whether it is on retail banking, insurance business, capital market and those all are growing well. We see tremendous growth in Europe in Germany, we will grow well again in the UK. So, those have a good outlook for us. We see good traction in life sciences, which is the pharmaceutical business. We see very good traction on hi-tech and the outlook seems to be good in it and margins are very strong. There is very good traction on retail and consumer products, there what is happening is that everyone is jumping into a new omnichannel world. Anything you are buying, you are okay to go to the store, you want to buy it on your mobile and everything should be seamless. So that is where the consumer trend is and we are in the middle of it. We have built a platform called ‘Equinox’; it allows any client build their e-commerce capabilities. So, we see a huge benefit in that and there is good traction. But today atleast most sectors are doing well, and it is not such that anyone is not doing well but these are doing-especially better. 

Q: With the pace at which you are growing, do you think that there should be some portfolio addition and there are good companies that you would like to pick up, invest in and acquire?

A: Absolutely, acquisitions have really worked very well for us. We have made several over the last three years or so and each of them was integrating well. So, we have done acquisitions in the SaaS area, for ServiceNow, Salesforce. We have done acquisitions that have helped us in digital engineering. So, all areas of growth for us today. Looking ahead, we have an active pipeline of acquisitions and we will look at several at a given point in time. As you said, our approach is that is it strategic fit or not then there is a cultural fit because this entire is a people business. So, is it going to work, i.e., are the people in that company and the people in Infosys can work together and then we look at the financials. Of course, it should be accretive to our shareholders and all. Once all that is done of course are they ready with doing the deal. So, we think that it will continue and we will get good traction with that. We do not have a tag that this much should be done in these many quarters. It is more what is fitting and what is making sense.  

Q: Metaverse is the new buzz word and it is an 8 billion dollar market at present. So, what kind of opportunities do companies like yours have on the front and how big is it?

A: Metaverse, as you said, is a massive opportunity and as you said your son probably knows more about this than most people because they are using it. Metaverse has got many things, just an example is that we do AR, VR, i.e., we visualise things in the Metaverse. There we have done work with clients for example in the pharmaceutical business, where they can go inside their lab and look into how to change things used for formulations. We have worked for a manufacturing company where you can go on the shop floor and how do you visualise what are the changes we have made and how we can repay something and how to improve something. The application is tremendous and allows clients is to do many of the tasks by not having to physically do all of that at the same time. So, you can expand what is possible. We have a very special lab, we built a platform, we call it internally the XR platform, where the clients can use it to build their Metaverse capabilities. We already have very good client examples which are now seeing more and more interest. So, clients are getting interested. So, a very strong outlook for Metaverse. We are fortunately with a platform already there and hopefully will build on it. 

Q: Technology will take over everyone job, on the contrary, I think, you people are hiring more and there is a need for skilling etc., which is a constant process. Attrition rates are high and demand is huge. By when do you think that it will settle down and how are you seeing your own hiring trends and the need you will have to bring in as it will have a concern on your books because of wage revision, more people are in demand so to retain talent. How do you work around those lines?

A: That is a huge area and there we are working on. Today, what is happening is as we were discussing before about the training and Infosys has the best training in my mind of any company. So, what tends to happen is some companies don’t do any of this training and when the growth is high, they tend to recruit and we have seen some of these impacts. Now, our approach is that we are building more and more capability and capacity by recruiting more people. This year, we will recruit 55,000 college graduates around the world of which 52,000 are in India. That is a huge growth and the next financial year it will be even more than that. Now, all of those people will be trained and brought into our usage, our capability, work on our methodology and be ready for clients. 

Q: But are there some challenges that one should be cautious about? 

A: From my side, there are really no headwinds as you can see maybe I am fairly optimistic about most things in the future. The thing that we as a company and I discuss with the team should always be careful about is to not become compilation but keep that intensity and hunger. And if the same if we have a look in the country then there is a tremendous try if you look at the youth of the country, you look at the leadership of the country. That is the view and we want to do something in creating an impact. As long as we have that sort of intensity, my view is that we have a lot of possibilities for the future and hopefully all of us can execute on that. 

Q: What is your message for the shareholders who have invested in your company?

A: First a big thank you to all the shareholders. I think, they have taken a tremendous trust in us and we are extremely grateful. And, we will continue as we have done every quarter to work diligently to make sure that the shareholders' needs and the needs of our clients and employees are fully met.