Persistent Systems CEO outlines company’s strategy to stay ahead of the curve

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sandeep Kalra, the CEO of Persistent Systems, says the company is investing in capabilities not just to achieve the near-term goal of $2 billion in the next three years but to lay the foundation for a much bigger company.

In a conversation with CNBC-TV18, Kalra discussed the strategy that the company plans to adopt to achieve these goals,

Read the verbatim transcript of the interview below:

Q: So, the 200-300 basis points of margin expansion, when can you achieve it? Three years from now?

A: We are keeping that goalpost the same. If you look at it from our perspective, what has to be done to grow consistently in a macro that is good or bad? So, you need to have strong capabilities, you need to have strong customer relationships, and the ability to mine existing customers and acquire new customers. All of this is when the macro is bad, and things are changing so the technology landscape is changing. We need to invest in capabilities like generative AI, and we need to be ahead of the curve that is what Persistent has always been known for and that is what our endeavour is. We are not a price leader. We are a competitive leader concerning capabilities, and so on. So, we are investing in the capabilities not just to achieve our near-term goal of $2 billion in the next three years but to lay the foundation for a much bigger company to come based on competitive differentiation on an ongoing basis. And as the market improves, they should definitely give us much more leverage and obviously with that the margins will definitely expand. So, the goalpost remains the same – next three years aspiration of growth and margin expansion both remain the same.

Q: Since you are aiming for industry-leading growth in FY25 also, can you tell us if FY25 will be better than FY24?

A: We do not give forward-looking guidance, but if our track record is any outperformance-related thing, we have done significant outperformance, our pipeline is good, and we have done good order books. So relative to the market, relative to where our peers will land, I am reasonably confident that we will have a very healthy outperformance.

Also Read | Persistent Systems declares ₹10 dividend as revenue crosses a billion dollars again

Q: You have said healthcare will lead growth for the company in FY25 while banking, financial services and insurance (BFSI) will remain a bit subdued and high-tech. When do you expect BFSI the high-tech to turn around? What is the own internal assessment?

A: If you look at the last quarter gone by, barring the top one customer, high-tech grew by about 1.6%, and BFSI grew by 1.8% quarter on quarter (QoQ). And so, it is not bad growth relative to those segments for our peers because we live in a marketplace and the market demand environment also decides how we grow. So, for the near foreseeable future, while we have said healthcare is the biggest thing, there are different teams focused within Persistent on different segments. We will let the time pan out. We are relatively confident of performance which is more secular across segments.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow