As Infosys goes Through Massive Transformations in its Strategy & Branding, Virat Bahri discusses what it would take to take The Next Leap
Infosys, which launched its cloud services recently, is on the brink of the transformation in comparison; a shift they refer to as Infosys 3.0. The company posted net profits of Rs.68.23 billion for the year ended March 2011, growing by 8.8% yoy, but the results have been quite disappointing on the whole. Fourth quarter revenue of $1.6 billion almost breached the lower end of its guidance and there was a 1.4% decline in volumes as well (Angel Broking). Sequential revenue growth was just around 1% compared to 5.9% and 10.2% in Q2 and Q3 of the previous fiscal year. In Q4, Infosys experienced a fall in its margin by 110 basis points to 29%, which is due to lower utilisation. The company also dropped 3 ranks in the Power 100 list in 2010 to be ranked 11. A greater concern is the expected margin hit in the coming quarters due to increased hiring of around 45000 people in the current fiscal as well as rupee appreciation. Infosys CEO & MD Kris Gopalakrishnan, however, comments on a positive note to B&E, “If growth accelerates resulting in higher utilization, margins can improve.” Large transformational deals are coming back, but Europe is still plagued by sovereign debt fears. Moreover, 2011 would see the ending of the tax holiday for Indian IT companies. But the company’s strengths of strong cash flows, with cash and cash equivalents totaling $3.8 billion by the end of FY 2011, a debt free balance sheet and strong client relationships keep it in good stead for the coming quarters. Morningstar stock analyst Swami Shanmugasundaram says that the company’s package implementation and system integration services will be particularly accretive to revenues and projects “compound annual revenue growth of 16% for a five year forecasting period (compared to 16% in the past five years)”.
Of course, there are a number of changes within the company that have taken place, and top executives are unanimous that the next few years will see a lot of transformation. A new team has been set up with K. V. Kamath being appointed as the co-Chairman (non-Executive) with Kris and S. D. Shibulal has taken up the position of CEO; changes that will be effective from August this year. N. R. Narayana Murthy has bid adieu to all executive positions in the company. The exit of T. V. Mohandas Pai has been a major blow, and his statements to the media have led to Infosys’ celebrated management practices and philosophies coming under heated debate.
Under the Infosys 3.0 drive, the new team will divide its verticals into four industry groups with each having a separate P&L account. Infosys expects to take some significant initiatives in terms of employee utilization rates, onshore hiring, consulting services, investment into more emerging economies and counter-cyclical verticals like healthcare & public sector, better utilization of existing and creation of new intellectual property and also ensuring a smooth succession to the first non-founder CEO in a few years. Critics would also want the company to look at inorganic growth. A lot has to change in its DNA if it has to compete with the likes of IBM and Accenture, particularly with respect to its relatively cautious approach. But the very fact that Infosys is showing an eagerness for tampering with a long standing status quo is a sign of a welcome beginning.
Of course, there are a number of changes within the company that have taken place, and top executives are unanimous that the next few years will see a lot of transformation. A new team has been set up with K. V. Kamath being appointed as the co-Chairman (non-Executive) with Kris and S. D. Shibulal has taken up the position of CEO; changes that will be effective from August this year. N. R. Narayana Murthy has bid adieu to all executive positions in the company. The exit of T. V. Mohandas Pai has been a major blow, and his statements to the media have led to Infosys’ celebrated management practices and philosophies coming under heated debate.
Under the Infosys 3.0 drive, the new team will divide its verticals into four industry groups with each having a separate P&L account. Infosys expects to take some significant initiatives in terms of employee utilization rates, onshore hiring, consulting services, investment into more emerging economies and counter-cyclical verticals like healthcare & public sector, better utilization of existing and creation of new intellectual property and also ensuring a smooth succession to the first non-founder CEO in a few years. Critics would also want the company to look at inorganic growth. A lot has to change in its DNA if it has to compete with the likes of IBM and Accenture, particularly with respect to its relatively cautious approach. But the very fact that Infosys is showing an eagerness for tampering with a long standing status quo is a sign of a welcome beginning.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
