BW Real 500: Strategic Thrust

Infosys has never been so different. India’s second largest IT services company has been living and breathing ‘digital’ ever since its first non-founder CEO, Vishal Sikka, took on the reins of the company on August 1, 2014. In 2015-16, Infosys further sharpened its focus on digital transformation, as Sikka attempted to meticulously transform, what has so long been, a traditional services industry.

A recent e-mail from Sikka to all employees warning of tougher times ahead, has created waves in the company as it refashions and restructures itself. “A services company must be more, and we, Infoscions, as individuals and as a company, must be more. We must instead become a company that delivers value and innovation. Our context has fundamentally, and irreversibly, changed, and we cannot go back to the approaches and methods of the past,” Sikka said in a letter to Infosys shareholders.

“It is with this new reality in mind that we embraced three simple ideas in our strategy: renew ourselves and help our clients renew their businesses; drive innovation and new opportunities in our business and with our clients; and do all of this based on a culture of education and collaboration,” the missive said.

During the period under review, Sikka focused on ‘Renew’, which is about being better, as opposed to ‘New’, which is about being different. “This is the breakthrough innovation. It is about finding problems that we don’t easily have words to describe, that no one has defined. It is the unknown problems. It is about leveraging automation to digitise our physical world, and using Design Thinking to focus on the empathy, the problem-finding, which uncovers new markets, for us and for our clients,” Sikka said.

In the 2016-17 financial year, Infosys’ revenues grew by 17.1 per cent in rupee terms to Rs 62,441 crore. In dollar terms, its revenue grew 9.1 per cent to $9,501 million and in constant currency terms, its revenue grew by 13.3 per cent. The company’s operating profit margin was 25 per cent and its net profit margin was 21.6 per cent. Infosys’ operating cash flows were healthy during the year and it ended the year with liquid assets of $5,202 million
(Rs 34,468 crore).

Infosys’ large deal wins have improved significantly during the year, an indication that its “Renew and New” strategy has begun to bear fruit. The total contract value of large deals won during the year increased by 45 per cent to $2.8 billion this year. “Due to our focused client engagement and value creation, the revenue from top clients improved during the year,” Sikka informed shareholders.

Infosys introduced the Zero Bench in July 2015, an initiative to eradicate the bench and create a marketplace inside the company so that people awaiting longer-term assignments continue to add value. In just nine months (FY16 end), more than 12,000 jobs had been created on the Zero Bench marketplace, and more than 67 per cent of the people on the bench had completed at least one of these.

Infosys also started its Zero Distance initiative to deliver more innovation by cutting across layers and maintaining zero distance from clients. During the period, Infosys launched its Aikido service offerings, renewing its existing service lines and introducing new types of services. Infosys Mana platform is now bringing these services together with the help of artificial intelligence (AI).

Its acquisitions — Panaya, Skava and EdgeVerve — continued to add value for its clients. Infosys continues to look at acquiring companies that help advance its cause, and where there is a matching of purpose and passion. This becomes important as Infosys keeps shifting to a truly digital market where automation will play an increasingly bigger role.

“We will not buy revenue or ‘market share’ in markets of yesterday,” says Sikka.