Infosys' digital, new tech focus impressive, say analysts

Analysts say the Bengaluru-based company is moving in the right direction by strengthening in areas which hold promise for the future

As Infosys’s new management tries to give greater clarity on its strategy roadmap, most analysts believe that the Bengaluru-based company is moving in the right direction by strengthening in areas which hold promise for the future. In particular, they are of the opinion that the company has made strong inroads into the digital space and some newer technologies such as social, mobility, analytics and cloud (SMAC), which is quite encouraging.

CEO & MD Vishal Sikka, along with his management team, on Thursday outlined some of these capabilities while discussing the new strategy roadmap in an analyst meet at the company’s Pune campus.   

“Infosys new management’s maiden analyst day was marked by Dr Sikka’s reiteration of his “New+Renew” theme of igniting new growth engines from SMAC and increasing efficiencies in traditional work horses through software,” a CLSA report said. 

“We were impressed by the fresh vision from a round of new faces heading key verticals and sources of differentiation around analytics and digital. Infosys is clearly exploiting its latent strengths in training and talent to catapult it back to industry leadership.” 

In order to strengthen its position in the digital space, Infosys has recently attracted some of the best industry talent, including Navin Budhiraja who was earlier chief architect of SAP’s SuccessFactors, and Abdul Razack, who earlier headed customer engagement and strategic projects at SAP. Razack is currently senior VP at Infosys and heads the Analytics and Big Data practices.

Over the last two quarter, the company has also increased headcount in newer technology areas such as big data & analytics, cloud and digital. “The management was keen to invest in the newer technologies and moving up the value chain. Moreover, they highlighted improvement in productivity (revenue/employee), steady margin, more projects in newer technology, part of strategic initiatives of clients, moderating attrition, and large deal win,” brokerage firm Prabhudas Lilladher said in a note.

According to CLSA, while the individual project sizes in the digital space are small, there is a great deal of opportunity in terms of downstream works. “We were impressed by Infosys’ capabilities in the nascent Digital and Analytics horizontals thanks to its strong scale (16,000 employees, 1000+ projects, 240 clients and 70+ partnerships) that was underscored by several examples and interactive demo stations (Insurance, Telecom, Banking),” CLSA pointed out. 

It said while the future recovery of the company depends on accelerating growth by improving account mining and revenue productivity, “Infosys’ success, in its steps taken so far, inspires confidence.”