Infosys CEO Makes the Pitch for Moving Up From Cost Based to a Value Based Model for Indian IT Firms
More than 100 days as the chief executive of India’s second-largest information technology (IT) services company Infosys, Vishal Sikka on Wednesday said he was upset at the sector. He added there was a “better direction” the industry must look to take. Sikka, who comes from a software product background and was the chief technology officer at Germany-based SAP, said he found the IT services sector a “tale of two cities”. On the one hand there were several opportunities, but on the other there was a “depressing reality” of focus on cost arbitrage and lowering costs. “I was not deeply familiar with the services industry till recently,” Sikka said in his pre-recorded video keynote address at the CeBIT India conference in Bengaluru on Wednesday. “I find all of us in the industry in a downward spiral. It’s like a treadmill of increasingly lower cost, hiring people faster and faster, from more and more mediocre places, training people less and less, putting them into job faster and faster. I think that is a wrong direction.” Sikka added the sector should not look at “doing old things cheaper” and instead look at doing “new things”. Infosys on Wednesday said its revenue an employee would go up in two years. Though the company has said it wanted to increase revenue an employee, this is the first time it has set a horizon. Sikka made the comment while addressing the Axis Capital investors’ meet on Wednesday. “Our revenue per employee will go up from here in the next two years. If we are not able to do this, then we have a problem,” he said. At present, the revenue per employee at Infosys is around $50,000.
Sikka also said this should be possible with several of the initiatives that the company has put in place. One of them is increasing automation and use of technologies such as artificial intelligence. He also added that the company is already working on at least 40 projects that were signed in the last 60 days in the predictive maintaince and Big Data space.
“We will continue to be a services company but you will see an increased use of artificial intelligence, automation and reducing our dependence on human intervention. I think we can see this happening in our BPO segment where use of automation can change customer experience,” he added. Noting the changing pattern of client demand, he reiterated that Infosys will focus on “renew and new” to drive growth and use of “design thinking” to solve client problems. Infosys has already set in motion the process of “design thinking” by training 30,000 employees in design thinking by the end of this financial year. “Every business today has a renewal agenda where they want to keep existing investments intact and improve the life of the system. These companies also have a new agenda, where they are looking at new ways to reach their customers. So, there is a constant dual agenda — new and renew. Our strategy, therefore, will be a reflection of our client’s strategy,” said Sikka. Though the requirement of new and renewal business proportion will vary from company-to-company, depending on its advancement in the transformation space, the underlying requirement for both across all companies exists, he said.For the renewal agenda of customers, Infosys plans to improve its existing services like BPO, infrastructure management, application development and maintenance etc, via automation and artificial intelligence among others.
Infosys is also keen on complimenting its renewal agenda with own new agenda and plans to use design thinking as the key tool. “For this (to tap the new agenda of clients) we are investing in design thinking, which are techniques for helping out clients think about new opportunities and new kind of ways to be proactive to identify problems,” said Sikka. The company is also starting to work with more and more startups to invest in them to become extension of their engineering so that Infosys can accelerate their roadmap. “The future that we see is help our clients renew existing businesses and also enter new exciting areas of business,” said Sikka. As we go ahead, we will lay our strategy more in details with more financials but this is something we are doing and we are incredibly excited about it, said Sikka. Reiterating his earlier comments, Sikka said the IT services industry needs to look at areas such as design thinking, artificial intelligence and automation to bring more value to clients. Ever since he came onboard Infosys in August this year, Sikka has been undertaking initiatives to train employees on design thinking and has stressed on the need to innovate and automate. Among other things, Sikka earlier launched an initiative called ‘murmuration’, which aimed at crowd-sourcing ideas from employees. The ideas could relate to any area that could benefit the company, such as improvement in delivery, process improvement or skills enhancement. The ideas could also include any innovation that employees believe can be brought to the work place, or a skill that they are willing to teach others. Infosys had received 2,650 ideas under the initiative, and it plans to execute many of those after evaluation.
Sikka had also initiated training on design thinking for the company’s employees at Infosys’ university in Mysore. He said, as of last week over 5,200 of Infosys employees had been trained on design thinking. The target is to take this number to 30,000 employees by the end of FY15. Based on the several meetings that he has had with clients ever since he was appointed the CEO-designate of Infosys in June this year, Sikka said, Indian IT services companies do not ask questions, which is one of the areas where they lack. “When I look at the feedbacks from our clients, not only for us but also for the entire industry, I see the primary thing is that we don’t speak up. We are great at following orders but we are not great raising issues and we are not great at raising opportunities that we see for our clients,” Sikka said. “That change in mindset is what we fundamentally go after. I think the way to get there is that we have to rely on our greatest strength education.”
Infosys aims to increase revenue per employee
Bangalore-based IT services company Infosys on Wednesday said in the next two years its revenue per employee will go up. Though the company has mentioned that they want to increase revenue per employee in the past, this is the first time that it has set a timeline. The comment was made by Infosys CEO Vishal Sikka while addressing the Axis Capital investors’ meet. “Our revenue per employee will go up from here in the next two years. If we are not able to do this, then we have a problem,” he said. At present, the revenue per employee at Infosys is around $50,000.
Sikka also said this should be possible with several of the initiatives that the company has put in place. One of them is increasing automation and use of technologies such as artificial intelligence. He also added that the company is already working on at least 40 projects that were signed in the last 60 days in the predictive maintenance and Big Data space. “We will continue to be a services company but you will see an increased use of artificial intelligence, automation and reducing our dependence on human intervention. I think we can see this happening in our BPO segment where use of automation can change customer experience,” he added. Noting the changing pattern of client demand, he reiterated that Infosys will focus on “renew and new” to drive growth and use of “design thinking” to solve client problems. Infosys has already set in motion the process of “design thinking” by training 30,000 employees in design thinking by the end of this financial year. “Every business today has a renewal agenda where they want to keep existing investments intact and improve the life of the system. These companies also have a new agenda, where they are looking at new ways to reach their customers. So, there is a constant dual agenda — new and renew. Our strategy, therefore, will be a reflection of our client’s strategy,” said Sikka.
Though the requirement of new and renewal business proportion will vary from company-to-company, depending on its advancement in the transformation space, the underlying requirement for both across all companies exists, he said. For the renewal agenda of customers, Infosys plans to improve its existing services like BPO, infrastructure management, application development and maintenance etc, via automation and artificial intelligence among others. Infosys is also keen on complimenting its renewal agenda with own new agenda and plans to use design thinking as the key tool. “For this (to tap the new agenda of clients) we are investing in design thinking, which are techniques for helping out clients think about new opportunities and new kind of ways to be proactive to identify problems,” said Sikka. The company is also starting to work with more and more startups to invest in them to become extension of their engineering so that Infosys can accelerate their roadmap. “The future that we see is help our clients renew existing businesses and also enter new exciting areas of business,” said Sikka. As we go ahead, we will lay our strategy more in details with more financials but this is something we are doing and we are incredibly excited about it, said Sikka.