Infosys Technologies generates over 60 per cent of its revenue from the US, which is witnessing a slowdown. A falling rupee did help the company tide over the quarter, and S Gopalakrishnan (popularly addressed as Kris) says that new opportunities, geographies and centres of excellence will have to be balanced against billing cycle delays and other pitfalls of the market.

On the sidelines of the company's first quarter results announcement on Friday, he took time off to talk to Business Standard. Excerpts:

In spite of the rupee depreciation and an addition of a record number of new clients in the quarter, your performance has been below par. How do you perceive the demand environment?

We are cautiously optimistic about the demand environment. IT spending is flat or slightly down, and the sentiment is clearly negative all around. Oil prices are volatile, inflation is a worry in many countries and food prices are also going up.

The overall environment is negative at this point in time. Our focus has been on our clients and have tried to ensure that we do everything to meet their expectations in this environment.

Are you noticing a major growth or slowdown in any particular sector?

Overall, we have done extremely well in the manufacturing sector. This includes automobile, aerospace and discrete manufacturing, besides process re-engineering. Our revenues from these sectors have gone up.

Of the 49 new clients we added in the last quarter, 20 are in manufacturing alone. This is a rise of nearly 2 per cent over the previous quarter and 13 per cent year-on-year growth. Besides, we have been seeing traction across sectors we operate in.

Having said that, I believe that the overall economic environment is challenging. Keeping this in view, we also need to be cautious.

You have been talking about non-linear growth but have simultaneously added thousands of employees every quarter.

The transition to non-linear growth areas will happen slowly. That's the best thing about Infosys [Get Quote]. We invest in the business and the future; and over time, the business changes.

If you look at our business today from five years ago, more than 50 per cent of our revenue today comes from non-application development and maintenance work. But when you look from quarter to quarter, that change is actually small. This indicates that we are also able to maintain margins while changing the business.

That's the company's strategy.

Despite sitting on a pile of cash, you have not pursued inorganic growth of late unlike your peers. . .

Acquisitions continue to be a surefire way of gaining both geographical and client leverage. Our deal with Philips to acquire their services operations last year instantly added over 800 employees and strong capabilities to further boost our mindshare with prospective clients.

At any time, we have 12-15 acquisition prospects in the pipeline. It makes sense to target companies in a buyout range of $300 million-$500 million. If there is the opportunity to acquire companies in Europe, it can be examined too.

Despite a drop in the utilisation rate, you have given a guidance of recruiting 25,000 this year.

This is required because we are seeing significant growth in many areas. Besides, there is a long lead time for recruitment. Typically, when we conduct campus recruitment, from where we get the bulk of our people, we have to give offers nearly a year in advance. It's also the reason why utilisation rates fall sometimes. 

What is your strategy for the domestic market.

The business unit for India started just six months back in November last year.  And we already have some wins in India.