Published on 4/02/2019 8:37:26 AM | Source: HT Media

Infosys drafts a new strategy to focus on growth from top clients

Posted in Stock Market| #Infosys Ltd #Stock Market #Expert Views

Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel 

Download Telegram App before Joining the Channel

Now Get news on WhatsApp. Click Here To Know More

Executives from Infosys Ltd’s consulting practice will now work jointly with sales and delivery heads to garner more business by offering a wider array of services to its top clients.

This effort is the latest initiative being rolled out by Infosys under chief executive Salil Parekh, who since taking over in January last year has focused on bringing stability at India’s second largest information technology (IT) services firm.

“There is a lot more focus on driving growth in top 30 accounts," said U.B. Pravin Rao, Infosys chief operating officer. “As part of this, we are looking to get digital strategists. Digital strategists are people, who will be again a handful, and who are consultants or technologists or people with industry background and will be looking at these top accounts."

Infosys expects to grow at a faster pace in the current financial year than in 2017-18. The company, after posting a 2.2% sequential increase in dollar revenue during the October-December period, raised its revenue outlook for 2018-19 to 8.5-9% in constant currency terms.

Infosys’s revenue grew 5.8% in constant currency terms in financial year 2017-18.

“We need it (consulting) to be part of the account team. It has to be a consultative-led selling approach," said Mark Livingston, Infosys’s head of consulting.

Infosys, like its peers, gets the bulk of its business from its largest clients: the top 25 clients accounted for a third or $1 billion of Infosys’s $2.98 billion in revenue in the October-December quarter.

In the quarter ended December 2017, just before Parekh took over as CEO, the top 25 customers accounted for 35.3% or $972.5 million of Infosys’s $2.75 billion in revenue.

This means that in calendar year 2018 business from top 25 clients grew at a slower pace of 4.1% as against an 8.4% growth in Infosys’s quarterly revenue.

Infosys’s latest effort appears it is looking to take a leaf out of its rival Cognizant’s approach which during the last decade modelled its ‘three-in-a-box approach’ under which the Nasdaq-listed firm got a consulting partner to work along with a sales and delivery executive for its largest accounts.

One reason behind this push by Infosys to make consulting more integral to its business is also driven by the change in the way companies globally, from big banks to healthcare firms, are looking to do business with their IT vendors.

Over the last few years, newer digital technologies like data analytics and cloud computing platforms offer companies to run their business better.

“Consulting is key as you have to work with clients at a strategic level to identify opportunities and co-create and co-innovate solutions. The account-based models require consulting to be a key part of the selling and service model," said Ray Wang, founder of Constellation Research, a technology research and advisory firm.

Infosys’s latest approach to consulting comes after many failed attempts by its earlier management over the last 15 years to leverage its consulting arm: From setting up a consulting arm at the start of the century to buying Swiss consulting unit Lodestone, then later merging it with its own small consulting business, Infosys has struggled to scale up its consulting business.

None of the Indian IT firms, including Cognizant and Tata Consultancy Services Ltd, share revenue from their consulting practices but analysts attribute Cognizant’s industry-leading growth over the last decade to its strong consulting business.