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Summary

On April 13, Infosys’ new CEO, Salil Parekh, reported the company’s annual earnings and at the same time announced significant changes to its strategic roadmap, including some divestments and a new acquisition. The vendor seems to be pivoting back to its services-led strategy and moving away from the product-led approach championed by previous CEO Vishal Sikka.

Infosys attempts to correct past “missteps” and pivots back to services under new CEO

As part of its results announcement, Infosys reported $10.9bn in annual revenues for its fiscal year ending March 31, 2018, which represents a year-on-year growth of 7.2% and net profit of $2.5bn. Under Sikka’s leadership, Infosys had taken a decisive step in integrating automation and artificial intelligence (AI) into its offerings, and this was reflected in the acquisitions of Panaya and Skava that were made in 2015–16. However, these very acquisitions were at the heart of the feud between the founders and the management of the company that ultimately led to the ouster of Sikka in 2017. Though an internal investigation proved that there was no wrongdoing, Parekh’s decision to divest these businesses still seems like an effort to exorcise the past and forge a new path forward for the company. Infosys continues to focus on growing capabilities around automation and AI, albeit under its proprietary Nia platform, as well as its Finacle, Edge, and McCamish portfolios.

Infosys is taking a multipronged approach to sustaining momentum in the marketplace, and Parekh has outlined a three-year transformational roadmap to recalibrate Infosys’ business. The main area of focus, however, is squarely on its digital services, which Infosys calls “Agile Digital.” There are five elements that make up Infosys’ Agile Digital portfolio:

  • digital user experience and interfaces though which customers interact with the business

  • insights driven by AI and big data to guide strategic decision-making

  • enabling innovation across the business by leveraging digital technologies to maximize business outcomes for clients

  • accelerating the movement to cloud and legacy modernization

  • cybersecurity and quality assurance.

Infosys reported that $2.79bn in revenues, or just over a quarter of total revenues for the year, came from Agile Digital in fiscal 2017, and growth rates for this segment continue to be stronger than traditional service lines. To bolster its capabilities around user-experience design, Infosys announced its acquisition of Wongdoody, a US-based, full-service creative and consumer insights agency. Wongdoody provides fully integrated branding campaigns and omnichannel programs that marry digital and physical in-store experiences which leverage data and analytics to drive content and messaging. With this acquisition, Infosys seeks to round off its end-to-end portfolio of digital offerings that now span the entire range from creative services to technology implementation and integration.

Infosys also continues to invest in re-skilling its talent pool to meet the increasing demand for skills around digital technologies as well as continuing its focus on leveraging design thinking as a key differentiator. To counter the headwinds it has faced in major markets around skilled visas, Infosys is investing heavily in building up its local presence in markets such as North America, Europe, and Australia. Parekh’s strategy to instill growth is a good move as it hones in on Infosys’ strength around services and is bound to further increase its appeal as an end-to-end partner in customers’ transformational journeys. However, with its competition following similar roadmaps, the speed at which Infosys is able to navigate this change of course will be paramount to success.

Appendix

Further reading

“Indian outsourcing bets its future on digital services at the NASSCOM India Leadership Forum 2018,”ENS002-000020(March 2018)

On the Case: Infosys – Microsoft, ENS002-000006(December 2017)

Digital Services Fuelling Growth of Indian IT, ENS002-000005 (November 2017)

Author

Hansa Iyengar, Senior Analyst, Advanced Digital Services

hansa.iyengar@ovum.com

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