Nearshore Americas

Will Infosys Stabilize Under Kamath?

Source: The Economic Times 

KV Kamath has offered reassurance that Infosys, which has appeared somewhat unsettled in recent months, will embrace change wholeheartedly while preserving the ethos of the company’s founder, NR Narayana Murthy.

Kamath, a towering personality himself in the banking industry, suggested a new openness to acquisitions, re-orientation of strategy and radical innovations for productivity increases.

“We understand what the challenges are and our response is ready,” he told ET in an interview on his first day as the new chairman of India’s second-largest software exporter. He succeeds Murthy, who held the job for more than 30 years, building Infosys into a respected global brand with annual sales of $6 billion (Rs 27,000 crore).

“If I look at Infosys, it has been a company that for a long time adapted to markets. I’m very clear that the adaptation to the market which is just now being called for will be done,” Kamath, 63, said. In the past few months, Infosys, which has for long set the standard for performance in the IT industry, has given the impression of being wobbly.

Many of its top executives, including Mohandas Pai, Subhash Dhar and K Dinesh, have resigned. Rivals-market leader Tata Consultancy Services and fourth-placed Cognizant, have grown sales faster while improving margins in tough market conditions. And there have been murmurs that Infosys has been very reluctant to make better use of its cash pile of $4 billion to buy itself competitive advantage.

Kamath, who transformed ICICI from a moribund industrial lender into India’s largest private bank, gave ample indication that an acquisition in the near future is a distinct possibility.

“You cannot buy just for the sake of buying. However, if there is a good opportunity, Infosys continues to look at all verticals. I would think, given the current situation, that could have more focus. Certainly, the changes that are happening will throw more on your table. There could be very interesting options as we go along.”

A mechanical engineer who acquired a business management degree from IIM-Ahmedabad, Kamath began his career at ICICI in 1971 and worked there for 17 years before joining the Asian Development Bank. He returned to ICICI in 1996 as its managing director and CEO, crafting a strategy that resulted in it becoming a pioneer in technology adoption and a powerhouse in retail lending.

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While there is no easy alternative to India as an offshore outsourcing destination, for Infosys and the rest of the industry, the immediate challenge will be the pressure they face from customers for better rates, putting pressure on margins. This pressure, he said, can be mitigated by productivity increases and innovation.


Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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