 "Vishal Sikka")
In a recent media interaction R Seshasayee, non-executive chairman of Infosys, said that $20 billion revenues by 2021 is a target and not an aspiration for the company. But looking at the current macroeconomic uncertainty and Infosys’ own restructuring, this looks aspirational.
Vishal Sikka, CEO of Infosys, has said that for the $20-billion target about $1.5 billion will come from acquisitions, about $2 billion will come from newer services and finally increasing revenue per employee of $80,000 and an operating margin of 30 per cent.
Sikka has five more years to achieve this but the way things are moving this target seems to be distant.
Let’s take acquisitions and compare Infosys to Accenture, the only company which has successfully acquired companies in the new technology space by spending billions and which are now impacting the firm's top line positively.
In 2014, Accenture started working on its digital strategy. That year the company created Accenture Digital by combining their capabilities in Accenture Interactive, Accenture Analytics and Accenture Mobility. In 2016 alone, the company has spent $930 million on acquiring 15 assets. In 2015, it invested $800 million. Over these two years almost 70 per cent of the company's acquisition was in the “new” segment.
But what is more important is that these acquisitions have been contributing significantly, with the new digital, cloud and security related services accounting for $13.5 billion or 40 per cent of its revenue.
Among the Indian IT players, Infosys has been an early bird in the acquisition space. Since Sikka came on board the company has acquired seven firms but the company is yet to reveal what has been the impact of these on the numbers. Panaya, one of its expensive buys, contributed about Rs 333 crore revenue but is still a loss-making firm.
To be fair to Infosys, in FY16 the company said it had been integrating Panaya to several of its recent wins but unlike Accenture the impact does not seem as effective.
Infosys has been talking about a “Renew-New” strategy which will garner $2 billion. But the company does not reveal the revenue contribution of this segment, although competitors like Tata Consulting Services (TCS) give a break-up of revenues of their digital play. Analysts believe restructuring of Infosys is a work in progress.
“Infosys is still in the midst of a change and I would believe that 60 per cent of the work is done. I have always maintained that when there is a leadership change and with restructuring happening at organsiations, people leave. But the churn among the senior management needs to stop or slow down,” said Sudin Apte, CEO and founder, Offshore Insights. Though the company has been able to fill the gaps, a change in leadership at any level means continuity of work slows down.
