India's second largest IT company Infosys reported record 38.3 per cent growth on Friday, reaping net profit of Rs 5,129 crore for quarter ending December. Infosys' newly appointed chief executive officer (CEO) Salil Parekh - in his first ever media briefing ever since he become the top boss of the tech conglomerate on January 2 - said he would "lay out" strategic priorities for the company to build a "roadmap for future". Salil's approach towards charting the roadmap bears significance considering his appointment after abrupt resignation of the previous CEO Vishal Sikka, and challenges like customer outreach and relation with Infosys founders. Though complete details about the company's future initiatives would be announced in April, it seems clear from his media interaction that Parekh wants the company be a part of the global digital disruption.
"We are very clear in any case that the market has evolved and digital is a critical element of that market. Equally with regard to consulting in terms of focus, we see lot of buying in the business today," said Parekh on Friday. His immediate priorities would include connecting with employees and clients to build a "roadmap for future". Stressing that each of its clients is facing digital disruption, Parekh said that this creates an opportunity for the company.
He said that building on strategy initiated by Infosys Chairman Nandan Nilekani, the company is conducting a review structured around four dimensions, namely, new market opportunities, client relationships, people, and service offering portfolio.
"Over the next three months, I am meeting with several of our clients, employees, partners... working with our leadership team and the Board to test the assumption and the approach and then build a comprehensive view along with four critical elements," he said. Parekh added that the entire exercise would be concluded by April when he lays out the "strategic priorities" for the company going forward.
Parekh is sixth CEO in Infosys' 36-year long history and second non-founder CEO hired at India's second largest company. He inherits a company with several strengths, including high margins, a large customer and employee base but faces immediate challenges, including working relationship with founders and employees, customer outreach, and stakeholders' trust.
Meanwhile, the company had posted Rs 3,708 crore profit in year ago period. In revenue terms, the company grew 3 per cent to Rs 17,794 as compared to Rs 17,273 in year ago period. Infosys sales growth outlook for FY2017-18 is 5.5-6.5 per cent. Infosys explained that during the December 2017 quarter, it had signed an Advance Pricing Agreement with the US administration that had led to reversal of income tax expense provision of Rs 1,432 crore. "Consequently, profit for the period has increased and therefore has led to an increase in Basic earnings per equity share by Rs 6.29 for quarter ended December 31, 2017," it added.
Previous CEO Vishal Sikka had quit in August following public spat with co-founders led by N R Narayana Murthy. The founders had alleged corporate governance lapses and questioned the USD 200 million Panaya acquisition under previous management and also flagged the high severance pay to former employees. Vishal Sikka was felled due to his lack of a good relationship with the founders. The founders might hold only a small percentage (about 12%) of the company but cast a long shadow on the company's functioning. Under Parekh, Infosys is now attempting to bring the focus back on growth and business. "...Our Q3 performance is strong... We are progressing towards stability and are well positioned to serve our clients in the new areas of demand," Parekh said.
On a sequential basis, the company's net profit rose 37.6 per cent, while revenues were up 1.3 per cent in rupee terms. In US dollar terms, Infosys' net profit grew to USD 796 million in the said quarter, while revenues were at USD 2.7 billion from the year-ago period. Its total headcount stood at 2.01 lakh at the end of December quarter. Infosys said Rajesh K Murthy, President, has resigned from the company citing personal reasons and will be with the company till January 31, 2018.
With PTI inputs