B&E: What have been the hits Infosys has taken in the past one year?
VB: In the last one year, there were two major challenges. The foremost was the currency volatility, as more than 90% of our revenues come from exports. We decided due to the high volatility, we could not take a long term exposure [on hedging], so we as a policy started keeping a focus of two quarters. We managed currency volatility much better this way. The other big challenge was cost cutting. We put tight controls on travel costs, on site non-billable resources, et al. It helped us retain margins. Third, when all this was happening, there was also huge political noise across US during elections. One of the arguments is the 50:50 rule, that 50% of hires must be local. So we hired 1000 people on site there.
B&E: But your clients have become risky in terms of paying up...
VB: We have a risk management strategy. We look at clients’ credit default spread; which allows us to understand their riskiness. Where it is high, we put a greater focus on accounts receivables. Yes, Nortel filed for bankruptcy; but it was a small client. None of our existing customers luckily have any current problems.
VB: In the last one year, there were two major challenges. The foremost was the currency volatility, as more than 90% of our revenues come from exports. We decided due to the high volatility, we could not take a long term exposure [on hedging], so we as a policy started keeping a focus of two quarters. We managed currency volatility much better this way. The other big challenge was cost cutting. We put tight controls on travel costs, on site non-billable resources, et al. It helped us retain margins. Third, when all this was happening, there was also huge political noise across US during elections. One of the arguments is the 50:50 rule, that 50% of hires must be local. So we hired 1000 people on site there.
B&E: But your clients have become risky in terms of paying up...
VB: We have a risk management strategy. We look at clients’ credit default spread; which allows us to understand their riskiness. Where it is high, we put a greater focus on accounts receivables. Yes, Nortel filed for bankruptcy; but it was a small client. None of our existing customers luckily have any current problems.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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