23/11/2014

Infosys creates a new company for a new business model

Infosys is the IT services company from India with revenues of $8.2 billion. For a while its been trying to create a new business focussed on products” and not services. It didn’t work. The only solution was to create a new company and the products division was spun off. This does not mean it will work but the services business model and the products business model are very different and was hard to run at the same time. This strategy makes sense and should provide some opportunity to succeed.

Infosys hived off its products, platforms and solutions (PPS) business — excluding the Finacle division — into a separate subsidiary earlier this year. The division accounted for about 1.5% of Infosys’s over $8.2 billion revenue.

The IT company’s vision under its Infosys 3.0 strategy has been to raise that to 33%, but more than three years into this strategy, the PPS needle has barely moved. The primary argument for a hive-off is that the culture and compensation structure of a products and platforms business has to be vastly different from that of a services entity. 

Today, Edgeverve is focusing on six areas — digital marketing, commerce, customer service, ecosystem management and procurement. The whole idea of doing Edgeverve was to take the PPS journey to the next level, make it better for people, customers and engineering. The entire game plan is to ensure depth of talent and not the number of people. We are investing in a sales force that connects into a different buying centre in the customer’s organization ((from what the IT services business is focused on). We sell to the chief procurement officer, chief digital officer, customer service officer,” Purohit said. 

Read more at: Economic Times


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