Nearshore Americas

Infosys Plans Massive Rehaul to Compete with Rival TCS on Revenue and Global Footprint

Source: Financial Chronicle

In its 29th year of existence, it is time for Infosys to once again embark on a periodic ritual — a self-overhaul. This “normal process” of re-organisation, undertaken every two or three years, has in the past seen Infosys redefine, reinvent and restructure itself.

But what is different this time is that the overhaul is expected to be truly massive, necessary for India’s second largest software exporter to compete with TCS, Wipro and the new challenger Cognizant.
Since 1998 the organisation has been recast six times — each time essentially to create need-based sub-units, beef up and/or split sales & marketing, and recast the geography-based and industry-based structures.TV Mohandas Pai, director, told Financial Ch­ronicle: “For the past 15 years we have been doing this. It is a normal process. It will make us agile and place us in a better position to serve our clients.”

Pai wouldn’t say exactly what changes are being brought about this time. But according to CLSA analysts Nimish Joshi, Bhavtosh Vajpayee and Arati Mishra, these could include reduction in the number of industry verticals, realignment of the sales force in Europe along country lines, a business transformation unit to target large deals, and consolidation of delivery manpower into two factories.

Similar attempts have been made in the past by other IT firms. For example, Accenture is known to work with clearly demarcated industry groups, with a matrix of technology and consulting competencies spanning all industry segments.

Asked about the plans, Nandita Gurjar, senior vice-president and group head of human resources of Infosys, refused to comment on what she called “speculation”.

For a company with over 130,000 staff on its rolls, re-organisation is important, say analysts, especially because Infosys is reaching a scale where fresh thinking is necessary for the next level of growth. At $6.1 billion in estimated revenue in financial year 2011, Infosys will need $3.5 billion of additional revenue over the next two years to keep growing at around 25 per cent.

It could not be immediately ascertained if Infosys has sought help from an external agency for the re-organisation process. IT offshoring experts like Sudin Apte, now CEO and principal analyst of research and advisory firm Offshore Insights, feel IT services are at a crossroads.

“They way companies engage with clients, the way clients pay for services is undergoing a significant change. Large Indian service providers are primed for volume-centric work, but now a shift is happening towards the value-centric side. If not aligned with new market realities, it’s likely some of the value-centric work may be missed,” said Apte.

The rather complacent Indian IT services industry has already seen a number of dramatic transitions this year — specially at Patni, Wipro and Mindtree. “Infosys has so far not announced any major changes in strategy, but in light of TCS and Cognizant’s growth trajectory, there has to be some introspection on the continued success of their existing path,” said Jessie Paul, CEO of Paulwriter, a platform for B2B marketers. She should know, for she had spent 12 years in key marketing positions in Infosys, iGate and Wipro.

According to her, Infosys, from a marketing perspective, has lost momentum over the past three years. “The focus on frugal marketing was absolutely right for a $200 million firm with billion-dollar dreams, but this is no longer appropriate,” said Paul.

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Infosys had earlier been so wildly successful with its safe and steady growth strategy that it has come to wear “conservatism” on its sleeve. But even with such a “conservative” business approach, Infosys has been quite nimble in changing its “go to market” strategy if the business environment so required.

In recent times, the company has seemingly been quieter on revenue growth vis-a-vis Cognizant and TCS. Even on margins, TCS has stolen a march over Infosys through 2010, even as the Bangalore-based firm has struggled a tad with the after-shocks of iRACE (Infosys role and career enhancement) gone wrong, felt Joshi of CLSA.

Tarun George

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  • It is time Murthy wakes up and he should remove are use less colleagues which sit in his office, he has been paying too much attention to his kids and I strongly feel the company is on sales target list, and Japanese will buy it