August 1, 2014 12:16 am

Infosys poised for software reboot

Vishal Sikka MD & CEO of Infosys photographed at Infosys campus in Bangalore, in Bangalore, India on Thursday, 31st July 2014. Photograph by Namas Bhojani for FT©Namas Bhojani

Incoming Infosys chief executive Vishal Sikka plans to move away from “low-cost, mundane” software services and focus on new high-growth business lines as he grapples with improving performance at the struggling Indian IT outsourcer.

Mr Sikka told the Financial Times that he would develop areas such as data analytics and cloud computing, as part of a drive to take on global technology “big guns” such IBM, as he starts work on Friday at India’s second-largest software group by revenue.

The changed emphasis is likely to spark fresh debate about management direction at Infosys, which had previously launched a plan known as “Infosys 3.0” to expand into similar frontier areas, only to shelve the venture in the face of weak financial results.

Infosys co-founder Narayana Murthy, the previous head who resigned last month, had focused instead on cost-cutting and more traditional outsourcing, having returned to rescue the company’s fortunes in 2013.

But Mr Sikka, who was chief technology officer at German technology group SAP before being appointed Infosys CEO in June, said he would press forward with moves to turn cutting-edge technologies into profitable business ventures.

“We have been in this mindset of low-cost, mundane services for a while, but when I look at the world around us it is being completely reshaped by software,” he said.

“The frontier areas will be a disproportionate amount of focus for me,” he added. “That doesn’t mean we can ignore the bread and butter businesses . . . but as an innovator, as a leader you have to think disproportionately about the future.”

An early pioneer of software outsourcing, Infosys’s waning fortunes have spawned worries about the global competitiveness of India’s $87bn software export sector.

But Mr Sikka said its fortunes could be revived by developing new software products, automating existing services, and launching a new $100m venture fund to invest in start-up businesses, which the company could then acquire or work alongside.

The incoming CEO cautioned that two years would be “a fair timeframe” for his strategy to improve financial results, an area where Infosys has lagged behind other Indian outsourcers, such as Tata Consultancy Services.

However he predicted the company could sharply improve growth and ultimately regain its position as the country’s largest software group, while also winning business from major global IT players such as IBM and Accenture.

“We can get back there, if I had any doubts I wouldn’t be here,” he said. “I also feel that we are in a much better position to compete with these global companies, the big guns, and that is what I would love to do.”

A cerebral computer scientist with a love of literature, Mr Sikka dismissed concerns that his background was ill-suited to running a company such as Infosys, which makes nearly all of its revenues exporting basic software services to clients outside of India.

“Being a thinker and a visionary is not contradictory to running a very efficient operation,” he said. “We just need to keep moving up the chain to the kinds of innovative things companies need to get done.”

Mr Sikka said he would also move to stem a sharp increase in staff turnover, while examining options to expand in regions such as China and Latin America to complement the US market, where Infosys earns roughly two-thirds of its revenue.

However he said his priority remained to develop a “exciting” new software project to help blue-chip clients such as consumer group P&G or German carmaker Daimler, whose assembly line he had visited earlier this month.

“I was thinking ‘my God,’ there so much more that software can do here [at Daimler],” he said. “Not only inside the car, but on the assembly line, and for the lives of the people who work on the assembly line . . . The software opportunity is a massive one.”

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