Infosys - the way forwards

Infosys CEO and co-founder SD Shibulal (‘Shibu’) was referring to his customers when he told analysts that “the biggest challenge is how to maintain industry leadership”. But he might just as well have been talking about Infosys.

For years Infosys had been lauded by analysts – myself included – as the gold standard for execution among the India-based IT services firms, notably in terms of the combination of growth and margins. But over the past couple of years Infosys lost that crown to TCS and ceded its place as second-ranked player (by revenues) to Cognizant.

Regular UKHotViews readers will know that my recent commentary on Infosys has been a less than glowing endorsement of top management changes, seen by the board as the best way to restore the company’s lustre. For that reason it was a noble gesture indeed on his part that I was able to spend a half-hour alone with Shibu to chat about the way ahead.

While I can say that neither of us pulled our punches, there were no knock-out blows and we parted with a firm handshake and respectful smiles. I can tell you, however, what Shibu has already said publicly and indeed what was evident to those who watch the industry as closely as we do; Infosys took its eye off the ball on large outsourcing deals. There were many reasons for this – and other contributing factors too – but Shibu took pains to point it that it was not because of a misguided (my view then) march towards ‘Tomorrow’s Enterprise’ – Infosys’ vision of the way forwards. The problems, he stressed, preceded the launch of this strategy.

In the past few quarters Infosys has jumped back on the large outsourcing deal bandwagon. It will of course take a few more quarters for these deals to fully flow through to the top line. Meanwhile, returning executive chairman Narayanan Murthy is out to fix the bottom line.

Shibu’s commitment cannot be questioned; neither can his belief in the strategy be shaken. The ‘truth’ though, as ever, will be in the numbers.