Infosys chairman seeks to reclaim past glory with digital push
(Bloomberg) -- Infosys Ltd.’s plan to turn disruption to its advantage by focusing on newer digital technologies will begin showing results in the coming financial year, according to billionaire co-founder and Chairman Nandan Nilekani.
Client offerings positioned around cutting edge technologies like artificial intelligence and the Internet of Things will help make Infosys much stronger, Nilekani said in his first interview since taking on the chairman’s role in August.
While the rest of the world may see Infosys as a troubled outsourcer that is past its prime, Nilekani sees an opportunity for Asia’s second-largest IT services company to reclaim glory. But it’s not going to be easy after a calamitous year that saw management clash with his fellow founders and the abrupt exit of Silicon Valley-based Chief Executive Officer Vishal Sikka. Days ago the company named Salil Parekh, a top executive from a European rival, as its new CEO.
“The world and its businesses are in the midst of the biggest re-imagining and transformation I’ve seen in the last 40 years, offering us a huge opportunity,” Nilekani said. “Our goal is to make sure we are positioned to deliver, so that we’ll again be in the right place at the right time,” he said, “We just have to do it.”
The billionaire, who returned after an eight-year gap, is a man on a mission as Infosys tackles the challenge of reinvention in an outsourcing industry facing slower growth and narrower margins. It must also contend with the Trump administration’s tightening controls over the worker visa program that the industry relies on.
Bangalore-based Infosys was founded by a cohort of middle-class engineers in 1981 with $200 of their savings. They built the company into a global brand by employing thousands of bright, relatively low-salaried engineers to cater to global corporations like Citigroup Inc, Microsoft Corp and Deutsche Bank AG. Revenue, profits and headcount all grew in the double digits.
But as technological change sweeps through industries from retail to financial services, clients are demanding that outsourcers automate mundane tasks while helping them transform into digital businesses.
“There’s a large opportunity out there helping global clients re-imagine their business, it’s opportunity of a new kind,” said Nilekani. One such client request was to use natural language processing and AI to make mortgage processing more efficient in mitigating risk.
“A lot of things we do are subject to commoditization and automation,” he said at his sprawling house in Bangalore’s Koramangala neighborhood, an area dubbed Billionaire’s Row and where fellow Infosys founder Kris Gopalakrishnan has a home. “We need to make our new businesses grow quickly with bigger margins – we need to manage both these things well.”
Much of the strategy and execution plans have already been discussed with Parekh, who is joining the company in January from Capgemini SA. The new CEO will have a quarter to settle in and adjust plans but Nilekani expects everyone to be “fully aligned” by the time the new fiscal year kicks off in April.
While Parekh has been appointed for a five-year term, he will have to hit the ground running. His chairman detailed a busy early schedule, with an employee townhall, strategy meetings, and convening with senior executives and the board within days of joining. The new CEO will then lead a delegation to the World Economic Forum at Davos and participate in an off-site strategy session. In between, he’ll travel the world visiting offices and meeting key clients.
“We now have strategy that everybody buys in to, a new CEO and the focus is back on business,” said Nilekani. “Infosys is on the path to a really good performance in the coming financial year.”
Not everybody thinks it is a sure thing. It was only six weeks ago that Infosys slashed its sales growth forecast range to 6.5 to 7.5 percent in U.S. dollar terms, compared with a previous target of as much as 9.1 percent.
Diviya Nagarajan, an analyst at UBS Securities India Pvt, said she would still "view Infosys as a work in progress.”
Nilekani wants to ensure that every one of the 200,000 employees at Infosys has the opportunity to learn and re-invent themselves. With a future of “extreme automation” facing clients from financial services to retail, training workers on technologies such as AI and machine learning with anytime-anywhere access to tutorials will be crucial.
“Organizations with great talent, rapid learning systems that are quick to market and have a certain resilience – those will make the new outsourcing mode,” he said. “It will all still be based on global delivery because all the great talent is right here.”
Nilekani, whose consensus-building approach allowed him to easily switch from the corporate world to work with the government, insists that outsourcing is not a spent business model. He has chalked out a plan to continue as chairman for another year or more, helping the new CEO integrate as he looks to add board members with a deeper understanding of business and technology.
Once all that is in place, he will make himself redundant.
“Infosys should be managed by professionals, founders can’t keep coming back,” he said. “That can’t be the Infosys model.”