IT major Infosys has expressed concerns that indirect impact of the Japan nuclear crisis and the unrest in the Middle-East could hit the IT industry. "Indirect impact is what we all need to think about... demand for oil will increase ...oil prices could go up again.There are concerns over inflation. There are also concerns over disruption of economic activity, a lot of components for the electronic industry, automotive industry all originate from Japan," Infosys CEO Kris Gopalakrishnan said.
He further added that the concern is over whether the "economic activity will come down, GDP growth will come down, which means investments will come down, which could have an impact on the IT industry".
The company, however, expects the direct impact of the Japanese crisis to be minimal on its business in the short-term. "The percentage of revenue from Japan operations is less than one per cent or approximately one per cent because of which the direct impact is minimal," he said.
"The situation is still unfolding, it is very difficult at this point to say, but it is possible there could be some indirect impact, but the direct impact could be minimal," he reiterated.
Gopalakrishnan also asserted that the company is not shutting down operations in Japan and said Infosys will support its clients from other locations.
"Business with Japan continues, support to our client continues. We will continue to support them from other locations. Hopefully this is temporary and we will be able to send our employees back," he said.
Of the 350 employees and their families in Japan, the company has brought more than 200 back to India. Gopalakrishnan said the employees "will continue to support Japanese clients from here they have already reported to work and we will completely support our Japanese clients".
"We are hoping that the situation will improve and these people can go back," he added.
The Infosys have presence in Shanghai, Singapore and India from where they would support the clients. When asked whether the crisis in the Middle East, West Asia and Japan could prove a dampener for the Indian IT industry's overall client sentiment, Gopalakrishnan said, "The impact will be felt over time, not immediately."
"Japan is a large economy, third largest economy, whereas Egypt, Libya etc are much smaller in size. So we have to wait and see how all these are going to have an impact, if any, I don't know at this point," he said.
Infosys's own direct business in Egypt, Libya, Bahrain is very less. It has 13 employees in Egypt and 20 in Bahrain, who have been brought back. "It is a rather strange quarter, where we have been responding to crisis and bringing people back," he said.
Talking about whether the Japan crisis would impact the component supply chain, Gopalakrishnan said, "It is too soon to really measure the impact, but something to be noted about".
"It is possible that alternate locations may take over supply temporarily. If it is short duration challenge, then impact cannot be much, but if it is a longer duration shut down, impact will be there, but we do not know at this point," he added.
On the implications of the Japanese government trying to pump in liquidity into system, he said, "it is too soon to comment."
"Right now the concern is to support reconstruction and reconstruction generates economic activity, It may probably balance out, We have to wait and see. It all depends if the nuclear problem is a sustained problem, then we have to worry."
The situation is evolving on a day to day basis, he said adding that the company is "hoping that they can get the nuclear plant under control. There is hope that they will be able to restore power, get the pumps working, it will improve the situation, we will have to wait and watch".
Infosys, which still has some employees in Japan, mainly in Tokyo, has given them the option to work from home or Osaka. The company's employees would be collecting money to contribute towards assisting the quake victims, he added.
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