Focus on cost rationalization.
By R. Chandrasekaran
CHENNAI: India’s second biggest software exporter Infosys’ executive chairman and co-founder N.R. Narayanamurthy has unveiled a three-year road map aimed at guiding the company and changing the employees’ mindset.
After nearly eight years of gap, Narayanamurthy met investors for the first time after he returned from his retirement in June to help the company revive its fortunes; the company was struggling for growth.
While Tata Consultancy Services and Cognizant Technology Solutions have delivered over 4 percent and 7 percent sequential revenue growth, respectively, in the just reported June quarter earnings number, Infosys struggled to post a little over 3 percent upside though this was modestly higher than the Street expectations. Significantly, HCL Technologies, which is fourth biggest software service provider from India, could manage to post higher growth than Infosys causing alarm bells to investors.
He has set an agenda for himself as well as the company. The three objectives that he had highlighted during the meeting were improving sales efficiency, increasing automation and boosting employee productivity, and cost rationalization.
During the annual general meeting of the company in June, Narayanamurthy had clearly indicated that he needs at least three years’ time to change the fortune of the company. Interestingly, during the interaction with investors, he had admitted that the absence of big deals focus had led to deterioration of growth.
He sounded confidence when he said that Infosys will focus on winning big deals aggressively without losing its market share.
The company’s concentration on proprietary software at the expense of IT outsourcing deals made them to post disappointing results during the last two years. Now the company is struggling to compete with the rivals such as TCS and HCL Technology.
While stating that the company will continue to concentrate on costs, so as to improve its margins by better management of on-site costs, he said that “change in company culture will take time to implement.”
The IT sector’s spending has undergone changes after the financial crisis hit the biggest economy in the world in 2008. As a well-versed expert in the field, Narayanamurthy is well aware of the challenges and seems to be setting the stage for the company as well as its employees.