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Infosys: 100 Days In

In September we wrote an event note following Infosys European analyst meet on the principal message in the keynote address by new CEO Dr. Sikka “Renew the core business, innovate into new businesses” (see here).

Earlier this month we attended Infosys’ U.S. analyst event and its Confluence customer meet in Orlando. Dr. Sikka was about 100 days into his role, and we were looking to see what developments there have been since September (and the Q2 FY15 financials call in early October) in the messaging about the company’s strategic priorities, also which new initiatives are already being implemented. Given the short time lapse, we were quite prepared for the possibility that we would pick up very little more beyond what has already been said by Sikka in various public addresses. But this did not happen.

In his keynote address, the messaging around “Renew the core business, innovate into new businesses” was consistent with what he said in September, perhaps more refined. But some priorities are now more evidently moving into execution.

Design Thinking: could this be a future big differentiator for Infosys?

Infosys recently conducted half day workshops on Design Thinking (DT, in which Sikka’s alma mater Stanford did pioneering research) for 5,238 of its employees, and aims to have provided for training for around 30k within the year. The implications of having a DT-trained workforce are potentially huge.

Sikka consistently emphasizes his belief in training, and refers to Mysore as one of Infosys’ ‘crown jewels’. He would evidently like to increase the level of ongoing training and development. This culture of training resonated well with clients to whom we spoke at Confluence.

There is shrewd business sense in this:

  • As the more mundane rules-based activities are increasingly automated, it will be increasingly important to have a “bottom of the pyramid” workforce that is operating at a higher skills level. We believe that upskilling the entry-level workforce is potentially  a major future problem for some offshore-centric IT services and business process services organizations
  • DT training could help in developing a workforce that is more confident  and more proactive in the way it approaches its work, for example in challenging clients and managers and suggesting better alternatives, rather than simply “doing as told”. This would represent a major change of culture (in India, the boss is always right). There will likely be early hiccups, particularly at supervisory and junior management levels. But longer term, it could help resolve an issue that has been a challenge generally for Indian-oriented service providers. And of course it has the potential to lead to the development of innovative services.

Role of Infosys Labs: Becomes More Immediately Central

Arguably, another of its ‘crown jewels’ Infosys Labs has recently had to trim the size of its workforce. Its head left at the end of 2013, and another head has not yet, as far as we know, been announced. – though two former VP execs at SAP Labs India have recently joined Infosys as VPs. We expect to see the level of investment in Infosys Labs increase, to enable it to pursue a clear remit to focus on automation, machine learning and AI, and develop IP that can be deployed in services lines to impact the way Infosys delivers its services.

Stitching together different offerings from across Infosys

In our last blog, we mentioned how the EdgeVerve subsidiary is operating in a startup-like environment. This should help in attracting talent (Infosys will be competing against the likes of Google), also in nurturing product development.  And of course it means that EdgeVerve can approach other SIs.

We wondered how Infosys was working to foster links between EdgeVerve and service lines such as PES and BPO to develop and then go to market with innovative offerings that are IP-based but services led – offerings around IOT, around big data and analytics, around the customer experience, and so on. Monthly meetings have already been established… though, of course, it is early days.

But we believe that the effectiveness of its approach to stitching together new offerings that leverage its technology and service capabilities, and services that might span current service lines will be a critical factor in Infosys’ longer term success. On its own, EdgeVerve will not be a major revenue engine for Infosys (unless Infosys decides to change its spots entirely and switch fundamentally from services to software) - but it does have the potential to be provide the IP that underpins a lot of future growth.

And of course, the focus on RPA and AI will help in delivering the kind of non-linear growth that IOSPs have been targeting for years. Since 'Confluence', Dr. Sikka has said he expects the company's annual revenue per capita to increase significantly above its current level of ~$50k within two years.

On a final note, during his keynote, Dr Sikka referred briefly to the “Infosys Information platform” for data processing, whch has open source components and Hadoop-based components, and to the concept of transforming the way that applications development activity is executed. We expect to hear much more about these in the next few years.

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