Infosys will remain a services firm, says Sikka; promises to deliver more value

Assuaging concerns over some sections of the industry that Infosys is becoming a product company, CEO Vishal Sikka has asserted that it will continue to be a services company going forward.

Sikka told HfS Research that erstwhile product companies are looking to become services companies, as a result of a shift to an “as-a-service” economy. “So for us, to become a product company would completely miss the point,” he said.

He added that the company’s goal is to deliver more value using software, IP, reusability of components and also capabilities across engagements.

Sikka who comes from SAP, a technology major that attained leadership position in Enterprise Resource Planning (ERP) software, had raised eyebrows amongst some sections in the industry who questioned his move, which put products at the heart of the company’s future growth plan.

Infosys, currently has Finacle and recently hived off its products and platforms business unit called Edgeverve Systems, which gave the impression to the market that it was focussing more on software products.

However, the CEO of the Bengaluru-based company also emphasised the need to transform the company both culturally and operationally as a part of his revival plan, something which he has mentioned in the past too.

“It should be driven by delivering much more value addition and more innovative services, which requires a very serious change in out mindset, in our offerings, as well as in our operational processes,” he said.

While Sikka has laid the blue print for the company going ahead, at present, bulk of Infosys’ revenues comes from traditional outsourcing which involves maintaining software and systems for mainframe computers.

“The trick for Sikka would be to do a balancing act between its existing business and the future ones which involve digitising systems and processes, wherein concepts like design thinking kicks in,” said Sanchit Vir Gogia, Analyst at Greyhound research.

According to Ravi Menon, IT analyst at Centrum Broking, the introduction of new services around digital technologies and combining it with its existing system integration capabilities are positive aspects.

Sikka strongly believes that this approach can help it to catch up with its peers and has recently even stated that the objective of 15-18 per cent year-on-year revenue growth and 25-28 per cent operating margin growth is on track.

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