Ronnie05's Blog

Infosys 3.0/Murthy 2.0: 10 Reasons why and what wouldn’t work!

Posted in Business Cases, Industry updates by Manas Ganguly on June 1, 2013

The poster boy of Indian IT, which had been richly exhorted and hailed by none other than Thomas Friedman in his book “Hot, Flat and Crowded” is out of steam. Infy’s loss of momentum is a well documented piece. It was India’s technology bellweather at one time. Its an insipid story now.

A lot about Infosys’s chequered fortunes has been attributed to N.R. Narayana Murthy – its founding member and while there have been other illustrious names such as Nandan Nilekani – it is Murthy who in some sense is treated as the “god” in Infosys. After a 21 yr CEO stint, followed by 9yr Chairman stint and a 2 yr Chairman Emeritus stint, as of 1st June 2013, Murthy is back as the executive chairman of Infosys. This is perhaps of the lacklustre performance of Infosys – loss of technology leadership, an otherwise series of uninspiring moves and an inability to move up the value chain inspite of money, resources and efforts that have gone into it.

Growth share In Infosys has tanked and Cognizant marched right ahead of Infosys - Vision Infosys 2.0 hasn't really worked

Growth share In Infosys has tanked and Cognizant marched right ahead of Infosys – Vision Infosys 2.0 hasn’t really worked

With a penchant for fanciful terminologies, Infosys after Kris Gopalakrishnan and under K D Shibulal orchesstrated the Infosys 3.0 vision – broadly related to moving up the value chain, greater scope and scale in partnerships and enhanced profitability. That didnot work – and now Murthy is back for his 2nd innings at Infosys to make Infosys 3.0 vision a success.

Would Infosys 3.0/ Murthy 2.0 work out? I dont see that happening – and the reasons-

1. Culturally Infosys is stuck in a time wrap – its hugely successful 1.0 times (1995- 2010) – the global delivery backyard powered by its huge and glorious delivery centre infrastructures.
2. I dont see Infosys having really innovating on products – it had the Financle platform on Banking. In terms of product and platforms, Finacle has beeen Infosys’s only pony. Nothing really has worked out.
3. With other specialized service providers such as IBM, Accenture, Capgemini taking the value pool game ahead, Infosys has been consigned to the low margin stuff at just making the customized delivery.
4. For all the talk, Infosys hasnt been able to break new business in new domains with new customers. Consider the Flypp Application store for instance.
5. Organizationally, Infosys has not been able to manage its diversity and size – with very many Delivery centres redoing the wheel when some one has already done something around this. The Silo mentality is a big organizational roadblock
6. Cutting edge – Intelligent software has suddenly shifted to the developers – to the mercenaries of the open source – the staid professional in business suit (Thats my personization of Infosys) is elbowed out at the cutting edge by the developer mavericks.
7. Interestingly enough – in 2010 when business in Africa was booming – Infosys thoought things were a little premature for entry into the dark continent. I would have assumed making software and technology for the 4+bn Asian and African subcontinents would be the big future – but not at Infosys.
8. In 2010-11, 97% of the revenues made by Infosys were from its existing accounts – cash cows being miled. A miniscule 3% revenues were attributed to new customers. A lot of the work with the old customers were being done in the old areas. Even with the existing accounts (for instance North America), Infosys is loosing share to the other Tech firms from India.

Not only has Infy been a laggard in emerging markets, its staple business in North America has not registered growth

Not only has Infy been a laggard in emerging markets, its staple business in North America has not registered growth

9. Lastly, from what i understood of the Infy R&D – it was a maintenance R&D, rather than an innovation one. Global technology is going places – 3D Printing, Bio Metrics, Foveated reading, Augmented reality and many other- Not sure where Infy would place itself on these technologies.
10. Lack of single unit one piece coherent strategy in Infosys is something Murthy needs to fix – as of yesterday.

Murthy would look to addressing some of the organizational issues immediately – but a larger gap is technology innovation. Ass i understand Infosys is a step out of synch with many of the big fellas – and unless there is something really significant (which as an organization – Infy is not geared for, as of now), i can see it a step behind in most of the things.

A lot of the observations and views in this post are based on my experiences of working in Infosys.

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