Infosys in midst of Three-Phased Reorganization: Will it be a Game Changer?

Last updated on: August 4, 2011 at 7:50 pm by Desh Kapoor

Infosys in midst of Three-Phased Reorganization: Will it be a Game Changer? 2011-08-04T19:50:01-05:00 Desh Kapoor

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Infosys is realigning itself. The entire realign work has been going on for last year or so. Broadly speaking there are 3 phases to it:

1. Business Operations Restructuring: This has been completed. It affected roughly 55,000 people. Basically, in this phase the company’s employees were aligned in Four Verticals:

financial services and insurance;
energy, utilities, communications and services;
manufacturing;
retail, CPG and life sciences.

As per company leadership, this realignment has happened “smoothly”.

2. Consulting and Services Integration: After the creation of Infosys Consulting, Infosys had three divisions doing competing work. Enterprise Services, Systems Integration, and Infosys Consulting. There was a time when all three had three different Business Intelligence groups – all going about on their merry way. This exercise is ostensibly to unite these three entities and their capabilities. It will also impact the share price because in general the Stock Market rewards consulting work more than maintenance and outsourcing work – which the ES and SI units were doing more. So, just the re-categorization will impact the number of employees involved in high value work as opposed to the lower value outsourcing work.

3. Product and Platform Innovation Capability Monetization: In this phase, the idea is to develop product and solutions capabilities in each of the four verticals such that, not only does the sales team go in with an offering of the services, but add to it solutions and product capability. Example of that commonly is to build frameworks and products to expedite management of work or even delivery in the operations, such as being along a an entire suite of cascading KPIs for an industry along with the Business Intelligence service offering. I have seen the Big Four even bring in pre-configured SAP boxes for Small and Medium term companies in the Oil & Gas segment to shave off the SAP implementation time by several months. This pre-configured solution is based off of past assignments in similar areas.

Concluding Remarks

I agree with the general direction of the changes in Infosys. I think its a good thing to do what is being done. What, however, has been missed is the scale of the operations required and the need to get some serious acquisitions. It is clear that Infosys is very conservative when it comes to acquiring new entities – specially in the consulting space. And, this is going to hurt its competition with Accenture and IBM.

Consulting area had required acquisition, and not a mere re-alignment. Re-aligning the three existing divisions into one whole, is more and in internal re-jigging – and in all probability to handle individual egos around the three different organization. The execs in the three entities were locking horns and creating redundant fiefdoms. That is going to be done away with now – or at least that is the aim. This, however, doesn’t solve the issue of scale of Consulting needed OUTSIDE of India. No company can compete with the US Consulting operations of any of the Big Four and even some much smaller companies. And unless they ready themselves up for that, the future will be bleak.

Its a good start for Infosys, but its a LONG way to go.

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