INFY TO SPLIT BUSINESSES
Move to help company weather management exits, offer scalability and lead to accountability, says CEO Sikka
India’s second-largest software exporter Infosys has adopted a new ‘break and grow’ strategy, something its larger rival Tata Consultancy Services had implemented successfully since 2009.
“We are expanding the bandwidth of the current presidents by creating smaller business units of $500-700 million headed by our next line of leaders. This will help us in better market penetration and client management,” chief executive Vishal Sikka said at an investor meet in Pune last Friday.
Smaller business units will allow Sikka and the heads of businesses to attend specific needs of a smaller client set.
In 2009, TCS had implemented a similar strategy, which helped the company grow from $6.34 billion in 2009-10 to around $16.5 billion in 2015-16. The software major currently has 23 autonomous heads managing smaller business units with revenues not exceeding $250 million. The units were given a target of $1 billion in revenues.
Between 2009-10 and 2015-16, Infosys’ revenue grew from $4.8 billion to $9.5 billion.
The company did not provide further details on the new strategy that Sikka plans to implement over the next few months.
“I am aware that many of you believe that certain recent leadership attrition has resulted in stretching our executive leadership bandwidth. I have to candidly say that some of the exits were related to performance,” Sikka said.
Infosys has seen a number of high-profile exits in recent months.
Last month, Manish Tandon, head of insurance, healthcare and life sciences, had quit after spending two decades in the company. Anup Uppadhayay, head of strategic global sourcing, also put in his papers during the month, taking the total number of senior leadership exits during Sikka’s tenure to seven. Sikka joined Infosys in 2014. At the investors meet, Sikka also said that second-quarter performance is expected to be better than the first. “Many of you asked us if Q1 was an aberration to the growth trajectory that we saw in the previous year. And if we have arrested the drag factors we saw in Q1. We are confident that the sequential growth in Q2 will be better than Q1.”
Infosys’ revenue grew 11.2% during April-June 2016-17, compared to a year-ago, and 3.6% against the previous quarter.