Europe strategic for Infy, London & Paris listing next: CEO

Infosys today listed its shares at the New York Stock Exchange . The company moved its shares from Nasdaq to NYSE. Speaking to CNBC-TV18. Infosys  , CEO, Shibulal said the move is part of a wider strategy and also added that Paris and London listing is also in the offing.

Also read: Infosys ADS starts trading on NYSE

Below is the edited transcript of his interview to CNBC-TV18.

Q: Is this a mere coincidence, the fact that you have decided to list on 12-12-12?

A: This has been in the making for a while. It has been in discussion for the last 4-6 months. It is a good day to list. So, it happened on 12-12-12.

Q: What is the rationale behind the listing on the New York Stock Exchange (NYSE) and moving out of NASDAQ? Infosys was the first Indian company to go for NASDAQ listing. Is this an indicator of a larger strategic shift for Infosys, the fact that you are moving out of the NASDAQ to the NYSE Euronext?

A: We had a great relationship with NASDAQ and great listing. We were the first Indian company to be listed on NASDAQ. It was extremely strategic for us. Today, our strategies have expanded. If you look at the Infosys 3.0 strategy, one of our focus area is continental Europe and it made perfect sense to actually get into a listing, which will allow us to enter the European markets.

So, by being on NYSE, we now can do a Euronext, which will allow us to list in Paris and London without expanding our equity base. Now, this will give access to European investors. It will increase our trading window. It will allow us to create some strategic branding in Europe. So, in that sense this is about expanding our global brand and it is very much in line with our strategic direction.

Q: So the European markets then become strategically more important for Infosys?

A: We are looking at our strategic action of 3.0. It is about creating balanced portfolio. One of the balance, which we want to do is on the geographical portfolio itself. Today we get about 22 percent of our revenue from Europe. It is aspirational for us to grow that revenue faster.

For example, we just invested through the Lodestone acquisition, so that is a European acquisition. It is our strategy to build a balanced portfolio. Geography is one dimension in which we want to build. So, in that sense, Europe is very strategic for us.

Q: So given that, would this actually lead to a listing on another European exchange?

A: The first listing possibly will be in Paris. We are fully listed in US. So, the move from NASDAQ to NYSE is easier, because the regulatory regime is same. We now have to submit our forms for the European agency and in about six to eight weeks or slightly later, we are expecting to get listed in Paris, followed by a listing in London.

Q: There is a lot of concern about the climate and the fact that things continue to look extremely weak especially as far as December is concerned on account of a host of reasons. The view is that you are likely to miss that 5 percent guidance that you held out for the October to December quarter. How bad is it looking at this point in time?

A: In October, when we gave the guidance, our visibility for the rest of the year will be about 85 percent, because it is very much in-line with our yearly visibility in the beginning of the year, which is 65 percent. By the time we get to the middle of the year, that visibility improves to about 85-86 percent. This means that for the rest of the year we have a gap of about USD 500 million, which we need to make up through large deal wins, ramp ups, increase in the large clients and various other means.

Some challenges emerged after October. For example, the number of furloughs, which we experienced, was more than what we expected. The length of the furloughs actually expanded in few cases.

We saw a couple of client ramp downs. These are not secular in nature, not in one industry, geography, couple of client ramp downs, but material in nature. Lastly, Sandy also had an impact because our financial client base is mostly on the East coast. Sandy forced our clients to shut down from couple of days to couple of weeks. Simultaneously, our people were also not able to work. So that had an impact on the offshore programmes also. These challenges have emerged in the last few weeks. At the same time, we have about four months to go for the rest of the half. If the business velocity picks up it will allow us to address some of these challenges.

Q: Do you believe that we are going to see a better new year for Infosys given the challenges - Sandy is over and done with but besides that, do you see a pickup as far as deals are concerned?

A: It is slightly too early, because the budgets are not close. We expect the budget to close by February. Now the financial segment continues to be under stress. I read in a recent report that said that the financial segment is over employed by about close to 60,000 people and we are still experiencing layoff in financial services. Retail for example, will wait for the holiday season sales and manufacturing will also have a relationship with retail. So, in that sense, it will take maybe another six to eight weeks, but by the end of February we will have a much better view on the next year.