Infy eyes emerging mkts to narrow gap with TCS
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IT major Infosys has decided to revamp its efforts in emerging markets — a geography that has not yielded great results for the company over the years — in a bid to narrow the revenue gap with market leader Tata Consultancy Services. The new initiative, to be driven by V Balakrishnan, the outgoing CFO, will be crucial to the company's fortunes, Infosys' executive co-chairman Kris Gopalakrishnan told FE in an exclusive interaction.
An examination of the company's geographic revenue spread reveals that the 'rest of the world' territory, minus the key markets of the US and Europe, has been stagnant for a long time. In the September quarter the territory yielded 12.6% of its revenues, barely going past the 12.5% share recorded in the June quarter. During the same quarter last year, it fetched 12%. The slow growth in this region has been a worry for Infosys for some time now. The story is not very different with its Indian domestic business, which has fallen to 1.6% of total revenues from 2.2% during the corresponding period last fiscal.
Gopalakrishnan wants a change in fortunes in this space, and pretty quickly at that. "Emerging economies around the world have been growing 6-8-10%. We have not been able to take advantage of it. There are many short-term opportunities to leverage in these parts," he said.
This is where Balakrishnan's role becomes crucial. "Bala is the right person for this role. He asked for a new challenge, and we have given it to him," Gopalakrishnan said.
Infosys' long-term plan is to get to a stage where revenues are split 40:40:20 between North America, Europe and the rest of the world.
At the moment the US contributes 64% and Europe 22%. This imbalance is what the company is trying to correct. But obviously, that's not an easily achievable target with Europe slowing down as an economy.
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