In­fosys bets on au­to­ma­tion for 30pc mar­gin on $20b rev­enue by 2020

The Pak Banker - - COMPANIES/BOSS -

In­fosys Ltd, the se­cond big­gest in­for­ma­tion tech­nol­ogy (IT) firm in the coun­try, is em­brac­ing au­to­ma­tion and fu­tur­is­tic tech­nolo­gies such as vir­tual re­al­ity and as­sisted driv­ing to in­no­vate it­self at a time when the in­dus­try is go­ing through a ma­jor dig­i­tal trans­for­ma­tion.

By de­ploy­ing fewer em­ploy­ees on projects that could be au­to­mated, Vishal Sikka, chief ex­ec­u­tive of­fi­cer of In­fosys, hopes to in­crease the rev­enue per em­ployee from around $50,000 cur­rently to $80,000 by 2020. This, he be­lieves, will help the com­pany achieve a tar­get of 30% mar­gin on $20 bil­lion rev­enue by 2020.

The dig­i­tal trans­for­ma­tion shap­ing up the world has led to a lot of "client anx­i­ety" in ev­ery in­dus­try, an op­por­tu­nity that In­fosys aims to tap. Com­pa­nies such as Uber and Airbnb, which have re­spec­tively rev­o­lu­tion­ized the cab-hail­ing and hol­i­day-room rentals, are em­pow­er­ing the end-user. This kind of end-user-cen­tric ap­proach is putting a dual bur­den on legacy com­pa­nies of dif­fer­ent in­dus­tries in terms of costs and the abil­ity to in­no­vate.

"It has be­come pos­si­ble to dis-in­ter­me­di­ate a long es­tab­lished in­dus­try in very pow­er­ful new ways, faster than ever and more ef­fec­tively than ever. And that is also fu­eled by a tremen­dous cost pres­sure that busi­nesses feel be­cause the ex­ist­ing in­fra­struc­ture that busi­nesses have be­comes much more of a bur­den to deal with be­cause of its lim­i­ta­tions, be­cause of its high costs. And low­er­ing the cost of the ex­ist­ing land­scape be­comes a mas­sive pri­or­ity for busi­nesses," said Sikka on Mon­day at a con­fer­ence or­ga­nized by Ko­tak In­sti­tu­tional Eq­ui­ties in Mum­bai.

"We are at a time where there is a mas­sive trans­for­ma­tion of the world around us driven by dig­i­tal tech­nol­ogy. And at this time, the world is in a very in­ter­est­ing sit­u­a­tion. The tra­di­tional IT com­pa­nies are not the ones help­ing the great IT trans­for­ma­tion. They are in fact a part of the prob­lem, not a part of the so­lu­tion. Then you have a whole bunch of start-ups. While they have ex­cit­ing ideas, tech­nolo­gies and so­lu­tions, they don't have the ma­tu­rity, the scale to solve the com­plex prob­lems that en­ter­prises need," said Sikka. "I be­lieve that we have a unique op­por­tu­nity to be the lead­ing IT ser­vices com­pany in this time. And that is our en­deavor."

In­fosys, which has tra­di­tion­ally worked on out­sourced IT projects by de­ploy­ing armies of de­vel­op­ers, will use soft­ware to au­to­mate re­dun­dant pro­cesses. It will go be­yond the ba­sic au­to­ma­tion around the BPO and lower-level IT sup­port type au­to­ma­tion to­wards high-value kinds of au­to­ma­tion in ap­pli­ca­tion main­te­nance, which re­quires more so­phis­ti­cated ar­ti­fi­cial in­tel­li­gence tech­nol­ogy, the CEO said.

"That shift to au­to­ma­tion is in­evitable. There is no doubt that it is go­ing to hap­pen," Sikka. "There is a huge force be­hind that is pow­er­ing this change in num­bers and that force is au­to­ma­tion… It is not to make the horses run faster and faster, or to feed them bet­ter, or to give them bet­ter sched­ul­ing, but it is to turn the horse cart into an au­to­mo­bile." Draw­ing a par­al­lel to In­dia's Green Rev­o­lu­tion that turned In­dia into a food grain sur­plus coun­try within the span of a gen­er­a­tion, Sikka said the same is bound to hap­pen with au­to­ma­tion and the IT in­dus­try.

"It's the same thing. Get­ting tech­nol­ogy, get­ting au­to­ma­tion, get­ting soft­ware, to power the peo­ple to make them more pro­duc­tive, the ba­sic un­der­ly­ing equa­tion of my com­pany, of my in­dus­try, whether other com­pa­nies re­al­ize it or not, is that the peo­ple-only model-con­duct­ing a pro­ject with only peo­ple and tools from the client or that they have in­stalled-has to be re­placed by peo­ple plus soft­ware," Sikka told an­a­lysts. The "peo­ple plus soft­ware" ap­proach en­sures that the mar­gins go up be­cause less num­ber of peo­ple work on a pro­ject. Us­ing soft­ware fur­ther in­creases the mar­gins.

This also means that the cost of the pro­ject goes down ben­e­fit­ing the com­pany and the client. Also, em­ployee ef­fi­ciency and uti­liza­tion in­creases for the bet­ter. The trans­for­ma­tion into dig­i­ti­za­tion and au­to­ma­tion has to hap­pen even as the com­pany fo­cuses on ex­ist­ing busi­ness or "yes­ter­day's busi­ness", said Sikka. If the old and the new are not con­sis­tent with each other, "you will have a cul­tural con­flict in the com­pany," he said, re­fer­ring to the the­ory prop­a­gated by nov­el­ist Arthur Koestler in his book The Act of Cre­ation.

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