On June 12, 2014, Infosys announced the August 1, 2014 appointment of Dr. Vishal Sikka to the Chief Executive Officer and Managing Director role. At the time, Constellation believed this appointment marked a significant industry development that gave Infosys an opportunity to embark on a much needed transformational journey.
Constellation's analysis of Sikka and his executive team's first year shows significant progress in not only the structural transformation, but also the market perception of Infosys. By all accounts Vishal Sikka and his team have succeeded in:
- Revitalizing the sagging employee morale. Employee morale had tanked to an all-time low prior to Sikka's arrival. In fact, the annual numbers indicate a sizable drop in attrition rate (from Annualized Consolidated 26.4% in June 2014 to Annualized Consolidated 19.2% in June 2015).
Point of View (POV): Turning around the sagging employee morale and readying them for a product and platform thinking is no doubt the highlight of the new CEO's first year at Infosys. Measures such as massive-scale design thinking training, internal crowd-sourcing of ideas through Murmuration, dress code relaxation, and a shift in self-directed management style have already made an impact. Improved performance has also mitigated most nay-sayers who now see a clearer direction for not only their own careers, but also the future of Infosys. Constellation expects the organization to fully change the internal culture from a command and control structure to one where employees are empowered to make more impactful self-directed decisions.
- Focusing on IP creation and platforms. A renewed focus on software and platforms included the creation of Infosys Information Platform (IIP) and Infosys Automation Platform (IAP) to complement existing Edge products and platforms. The arrival of Silicon Valley software expertise complements the brain trust in Bangalore and around the world. On the inorganic front, the acquisitions of Panaya and Skava (*subject to statutory approvals) in quick succession showed vision in automating through software.
(POV): Constellation believes that the focus on IP investment is much needed and also required to compete in the shift to digital. The IIP platform is one of many more to come where software provides economies of scale over hours. The other big area is how Infosys competes. It now goes into the market more unafraid to reach for more strategic deals and also more of the technology budget. Going forward, Constellation believes that creation of successful platform architectures, continued acquisition and integration of IP assets, and a customer focus on continuous innovation will help Vishal achieve the scale required to achieve the escape velocity required to stand out. While Infosys still has a lot of work to transform itself into a true product & platforms player, Vishal and his team have solidly placed the required foundational blocks in place to change the narrative from time and materials shop to IP creators.
- Revitalizing the brand. Often seen as a "has-been" success story, Infosys faced a crisis of client confidence with a series of high-profile departures prior to Sikka's arrival. The new Infosys has changed the tenor of client conversations with a focus on innovation, board room and CXO level issues, and the impact of technology on business.
(POV): Vishal's impact was immediate. CEOs of major Global 2000 companies who never met with past CEOs were eager to meet with Sikka about deals. A series of successful Infosys Confluence customer events, high profile wins, and shift in customer engagement, have helped transform the brand perception. While much has to be accomplished to compete for the time and attention of CXOs, the current trajectory is promising for clients, employees, and shareholders.
The bottom line: Clients have a credible option for a technology partner
For clients, the year has cleared the uncertainty emanated from multiple exits at the top prior to June 2014. When organizations are in transition, they need strong leaders who can show what is possible and how one can get there. Sikka's arrival brought hope that Infosys could make the transition into the digital age and move from has been to relevant player.
More importantly, steering a large, T&M-model IT Services shop on an IP and Product driven path while transforming culture and brand takes time. Infosys is making the move from advisor to innovator (see Figure 1). While the transition will take 18 to 24 months to complete, this transition reflects a 3 to 5 year journey. While the outside world has seen the improvement in morale, the move to design thinking, the shift to innovation, and the push towards IP over services, what's to come remains the long term structural changes required to build a future in a services company.
As with all big changes, it's hard to tell what's changing when you are in the midst of it. Constellation believes most Infosys employees will realize that they had gone through the biggest transformation the company has ever seen by the end of 2017.
Existing clients and prospects should:
- Take advantage of the Design Thinking workshops Infosys is hosting and start the discussions around newer areas of engagement. "Start small and scale as per the success metrics" is the appropriate approach for them as of now.
- Use this opportunity to find a partner to co-create and co-innovate with.
- Determine opportunities to achieve scale in optimizing costs to fund innovation
Figure 1: Creators and Innovators Trump "Trusted Advisor" in Next-gen IT services
With heavy contributions from Sachin Gosavi, VP of South Asia.