Advertisment

Rank 3: INFOSYS TECHNOLOGIES: Battling Billing Blues

author-image
DQI Bureau
New Update

NR Narayana Murthy
Chairman and Chief Mentor

Nandan Nilekani



CEO, President and MD

S Gopalakrishnan



COO and Dy MD

Directors



K Dinesh




HR, IS, quality


SD Shibulal,


Customer delivery


TV Mohandas Pai


CFO and head, Progeon


Srinath Batani


Delivery, US (West)





Basab Pradhan



Sr V-P, head of sales


Sanjay Joshi


V-P, head of marketing

Advertisment

At the annual press meet in 2001, Nandan Nilekani surprised people by

saying that Infosys expected to grow by just 30% during FY 2001-02. Infosys had

just declared 115% revenue growth, and slashing projections by 85% seemed

alarmist.

Performance

Highlights
Company battles billing pressure, looking for growth from volumes rather than high-end value business
Revenues from development and consultancy down. Maintenance, re-engineering and products up
Banking, FSI and retail verticals continue to grow. Manufacturing slows down and telecom takes a hit
Strengths
Company’s brand continues to be a major plus
Ability to predict and react quickly to unfolding events is a huge strength
Weaknesses
Low focus on R&D and high-end, high-value work can be a long-term handicap
Non-American revenues not growing fast enough
Infosys Technologies Ltd. l

Startup: 1981 l

Products & services: Software and Business Consulting Services

l

Branches: 28 l

Address: Plot # 44, Electronics City, Hosur Road, Bangalore 561229

l

Tel: 8520261 l

Fax: 8520362

l

Website: infosys.com

Nilekani was right. Though revenues grew 37%, this was the first time that

Infosys’ growth rate fell so drastically. Profit after tax grew by close to

30%, though PAT as a percentage of revenues fell from 32.8% in 2000-01 to 31.03%

in 2001-02–an outcome of billing rate pressure. In fact, the year saw a fierce

downward push on billing rates. If the bottomline has not been affected as much

as it should have, that’s only because the company was prepared for it from as

early as March last year.

Advertisment

Nilekani expects this year to continue to be a low-margin, volumes game and

has forecast a revenue growth of between 19% and 23% for 2002-03.

The slowdown also affected segmental earnings–revenues from development

dipped from 40% to 32%, while maintenance and re-engineering went up. Consulting

was also down. But Finacle, BankAway and PayAway–the company’s banking

products, crossed the Rs 50-crore mark for the first time, and now contribute 4%

of total company revenues.

As part of its belt-tightening measures, the company put the skids on hiring–down

from a whopping 82% growth in employee strength in 2000-01 to just 9%–and got

more cautious with salary hikes. Progeon (its new BPO subsidiary) chairman and

Infosys head of sales and marketing Phaneesh Murthy resigned recently, following

a sexual harassment case against him and the company in the US. His role was

taken over by Basab Pradhan (sales), Sanjay Joshi (marketing), and by CFO

Mohandas Pai who now heads Progeon. The less traumatic but more significant

handover took place earlier on March 31, when COO Nandan Nilekani took over as

CEO, with Narayan Murthy as chairman and chief mentor. In more ways than one,

FY02 marked the beginning of a new era at Infosys.

Advertisment