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Infosys, after signing its first big-ticket acquisition under CEO Vishal Sikka last week, is evaluating a dozen more startups � all aimed not at bulking revenues or adding clients, as Indian IT companies typically do, but at gaining cutting-edge technology such as automation and artificial intelligence (AI).
"We have a dozen targets we are looking at now," Sikka said in an interview to ET, days after the software company bought automation startup Panaya for Rs 1,200 crore ($200 million).
"Anytime we see a company with talent, capabilities and IP in these areas (AI and collaboration technology) we would love to go for an acquisition," said Sikka, a former SAP board member and the first non-founder CEO of Infosys. "That is our pursuit."
Sikka, 47, will be able to leverage Infosys' $500-million startup fund as well as about $5 billion of cash on its books to buy the kind of firms he is scouting for. For Infosys, Panaya was its second-biggest buyout after its purchase of management consulting firm Lodestone for $390 million in 2012.
Sikka, since taking over as CEO in August, has been putting together the key pieces of his strategy for a new Infosys, scrapping the previous 3.0 plan that was blamed for slowing revenue growth. He has handpicked some of the enterprise technology world's best-known leaders from SAP, including Abdul Razaaq, Michael Reh and Ritika Suri, and promoted some company veterans to lead new units in an internal shuffle announced last week.
Sikka's goal is three-fold � use automation and artificial intelligence to make existing service lines more efficient, increase the proportion of revenue coming from so-called next-generation services, and increase overall revenue productivity.
Over the long haul, his goal is to double revenue per employee to more than $100,000 from about $52,000 now, although he admits that would take a while.
"Over a long time, I would like to get the company to a hundred thousand (dollars in revenue per employee); it is not going to happen any time soon in five or six years. If you are looking at a 10 year horizon, you would want to get there," Sikka said.
A more ambitious target is to grow high-end revenue streams from offering next-generation services in the areas of big data and analytics. For instance, Infosys has around 76 customers for big data services. Sikka wants that number to reach 1,000 in about two years.
"And if you look at the five-year horizon, I want every single one of our clients to be doing design thinking work, I want every single one of our clients to (be doing) AI work," he said.
Sikka is making the right moves, said Partha Iyengar of research firm Gartner. Abandoning the 3.0 strategy has been one such move, he said. "The whole 3.0 (strategy) was, 'we are suddenly going to become a product-centric company.' I said why would you do that at a time when services is so huge? I also thought Infosys faced the danger of CIOs deserting them because of the product-centric positioning," said Iyengar.
"Vishal (Sikka) is putting the building blocks in place and also a leadership team in place which understands all this," he said.
While Sikka hinted at a bigger cultural shift waiting to happen in India's over $100-billion IT sector that employs more than 3 million, he said he was taken aback by the present lack of creativity and imagination to solving big problems.
"What I did not anticipate was the degree to which I find this mindset that we don't use our imagination, our creativity; we do more of what we are told," Sikka said.
"That has been a very big negative surprise for me; the degree to which I guess things have be come mundane that we don't think and don't imagine, and this is why I have been doing a whole bunch of initiatives around getting design thinking in there," he said.
On the positive side, Sikka found training facilities available at Infosys to be at par with the world's best, and something the company needs more than ever now to develop its pool of next generation coders.
"More than anything, it gives me the confidence that anything I say, the big things I say, is the fact that we have such massive ability to train people, which nobody else has in the industry. Actually, I don't think any company in the world can train people the way we can," said Sikka. |
