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Infosys: Going Strong

Infosys is turning over a new leaf, with a new CEO, new offerings, and new initiatives

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Infosys is at an interesting crossroads. With Salil Parekh taking over as the new managing director and CEO effective 2 January, 2018 for a five-year tenure from U. B. Pravin Rao  (interim  CEO & MD  and now re-designated as chief operations officer and director), all eyes are on the current transition.

“Having served and managed application service segment for Capgemini, focusing on North America and UK regions, Parekh’s experience will be quite valuable to Infosys which derives 33 per cent of its revenues from application service and 62 per cent of its revenues from North America,” says Deven R. Choksey, MD at KR Choksey Investment Managers.

Lately, Infosys has also been in the news for not so grand reasons. When Vishal Sikka put in his papers in August 2017 rather abruptly, it shook the entire industry. After all, tensions between the erstwhile CEO and MD and Infosys founders were not new.

But did that affect the credentials of the company? If we go by the BW Real 500 ranking of the IT bellwether in FY17, it has in fact notched up a level to 18th place from 19th last year. The ranking is based on the company’s total income and total assets that stood at Rs 1,54,379 crore in FY17, up from Rs 1,40,424 crore in FY16. A break up of the numbers suggests Infosys’ total income grew to Rs 71,564 crore from Rs 65,610 crore, and its assets to Rs 82,815 crore  from Rs 74,814 crore in the fiscal before.

“Our strategic direction is to drive a portfolio of market relevant design, consulting and technology services, enabled by software,” says Infosys COO Rao. “The successful execution of this strategy positions us as the partner our clients can count on to accelerate their digital transformation journey,” he adds.  

In the past few months, Infosys has taken significant steps to accelerate its digital transformation journey. It launched Infosys Nia, the next-generation artificial intelligence platform, building on the success of the earlier first-generation AI platform. With adoption of software platforms such as Nia, Infosys has had over 200 implementations across 100 clients in the past few quarters. The company has been increasingly focusing on new services especially cloud ecosystem, big data and analytics, API and micro services, data and mainframe modernisation, cyber security and IoT engineering services, which are showing promising results. Over the past quarter, these offerings have seen increased traction with clients, and contributed 9.4 per cent to the company’s revenues in Q2 ’18.

Infosys also implemented new initiatives such as ‘New & Renew’ and ‘Zero Distance’ in FY17 that were aimed at improving client engagement and performance delivery that resulted in higher employee utilisation.

In the last fiscal, the Indian IT industry saw muted growth due to structural pricing pressure faced by the sector on account of geo-political issues, mainly visa related. Amidst changing technology landscape, the sector has been making a transition from traditional IT services to digital services, thereby putting a lot of pressure on tier-1 companies to re-align their business models.

Going forward, the major challenges for Parekh will be to drive the company to the next level by incorporating the emerging technologies, overcoming its incumbents while turning the pricing wave, introducing visa-independent model, and looking for potentially accretive acquisitions, says Choksey. It’s time for yet another journey.