Even as the global economic environment remains murky, the IT bellwether Infosys Technologies is treading cautiously and raised its revenue guidance by a notch. S Gopalakrishnan, CEO and MD of Infosys, though optimistic, said threats of sovereign default could spoil the party for IT sector. Excerpts:
You talk about weaker economic recovery in the developed world, yet have raised your revenue guidance. Will you elaborate on this?
The guidance is based on our model where we know about the revenue stream for the months. The guidance given by us always factors the prevailing economic environment across the world.
But you have mentioned about sovereign debt crisis and its spill over effect from Europe to US. How will it have an impact?
When Lehman Brothers collapsed there was a domino effect on the financial services sector and then to the rest of industry. So similarly, if something happens in Europe, there could be repercussions across and it could impact industrial sector. So if our clients get impacted, then we feel the impact. There is a remote possibility of this but one cannot say that things will never happen.
As the barometer of Indian IT industry, you tend to beat your guidance. Take us through the last twelve quarters and your performance therein…
If you go through the history of the company not only in the last twelve quarters but also for all quarters, we have a history of meeting or exceeding our guidance except what happened in 2008-09. For this fiscal, we started the year with 19 to 21% growth but at the end of September due to the steep recession and downturn, we had to revise our guidance down for quarters ending December 2008 and March 2009.
So for the first time in company’s history, we revised our guidance down but other than that we have always beat our expectations quarter after quarter.
But there are times when you fall short of market expectations. Is it because the market always over-expects from you?
Our philosophy has been to under-promise but over-deliver. We understand there is a responsibility to use as much information we have. One of the reasons we give guidance for the year and the quarter is because we believe that we must share whatever information we have with our investors and shareholders.
Tell us about currency fluctuations and your strategy to counter it.
Currency fluctuation has been a big factor. For example, the Australian currency moved against the dollar by 10%. This type of movement is a challenge for anybody. Our hedge for $585 million is for the short term because of the volatility.