16 - Think India, Think Infosys

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alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/2d1f8ab7217d5de0db70485b070be18f2414580faba4ae7eb0c3ea26daec1c62.jpg (12544 bytes)" border="0" hspace="2" vspace="2" align="right"> CMD: NR

NARAYANA MURTHY

A size="2"> stroll across the Infosys park located on the out skirts of Bangalore makes you

wonder whether you have stepped into a university campus in another country. The interiors

are clinically designed, signboards plastered functionally, rooms spacious and informal,

employees lounging in seats surrounded by bamboo groves and completing the impression are

employees from international customer organizations mingling with their local

counterparts. Yet, a closer look reveals deadly serious employees, sprawled at their

workstations, or groups in earnest conversation.

So how does this organization, with a workforce of more than 2,000,

maintain a track record of 50 percent plus cumulative growth over the last four years.

Looking at its trend-setting achievements as an Indian company, the answer strikes

you–clinical transparency across all its working systems. As a searing vision, the

company appears to have realized that the only way it can actually become a global player

is by unambiguously revealing how far or close it is to becoming one.

border="0" hspace="2" vspace="2" align="right">The organization has, over

the years, repeatedly improved its financial accounting procedures, to a level where it is

the only domestic IT company that announces its financial results every

quarter–available a week after. It is also one of the few which have been publishing

their results, according to the US GAAP standards. Now the company has increased the GAAP

list to include Australia, Canada, France, Germany, Japan, and UK. All this, with the

burning vision to compete in the global markets, deliver world-class services

and products, and exhibit high growth levels and financial returns

for its investors. Infosys believes the service gap between its competitors in the global

marketplace can only be narrowed by acquisitions and mergers. And that means publishing

GAAP details in markets important for the organization.

Today, with more than 80 percent of the organization's revenue from the

US, this is the most important market for Infosys. The company is devoting considerable

attention to obtain government clearance for an ADR issue of $ 75 million. While this will

fund further expansion, the most important purpose is a planned acquisition of a suitable

US company, within the next two years. Infosys' exceptional transparency in functioning

extends to unconventional areas including assessment of intangible assets, brand, and

human resource valuation.

In 1997-98, the sales revenue for Infosys was Rs 260.4 crore, up from Rs

143.8 crore in 1996-97, thereby exhibiting a growth of 81 percent. In the previous year,

the growth was 54 percent. So what does Infosys do best? The core competency of the

organization can be described as customized software development and software maintenance,

while its vision is to become a globally respected organization, delivering best-of-breed

solutions, with best-in-class professionals. Infosys currently focuses on its global

markets through eight business units. These include manufacturing and distribution;

banking, finance, and insurance; banking business; retail and telecom; engineering

services; Internet and intranet consulting; technology advancement; and Nortel-Infosys

development units. In order to address the global markets, Infosys operates through 12

international sales offices

The business units deliver services limited to off-shore turnkey

projects, off-shore software maintenance, off-shore development centers, and on-site

consultancy. While the forte of Infosys has been customized software development projects,

the company plans to strategically increase focus on implementation of branded services.

This is prompted by the need to move up the value chain of software services, competing

more on quality and customer satisfaction and less on price. The confidence to move up the

value chain stems from considerable domain knowledge the company has built in warehousing

and transportation, banking, Y2K, and web applications. This has resulted in development

of products and their associated implementation services, including WMSYantra and

WebYantra, Bancs 2000 and Bank Away, In2000, and WebSetu.

border="0" hspace="2" vspace="2" align="right">Infosys expects future

growth in revenue to take place in engineering, ERP, and Euro currency services. Amongst

its major projects in 1997-98 were implementation of mission-critical product data

management system for Groupe Salomon, France; merchandising system for Nordstrom, USA;

wireless network solution for Nortel; and Internet banking solution for ICICI Bank.A

significant strategic outlook adopted by Infosys limits the extent of contribution in the

revenue by any product, market segment, or customer segment. By doing so, Infosys is

controlling risks associated with volatile global markets of today. With the Y2K

opportunity now a closed window, Infosys has decided to limit the contribution to its

revenue at 25 percent. Another example is the US market, which currently contributes 82

percent of the company's revenue. The attempt is to reduce this share to 60 percent in the

next few years, with an increase from the other regions, mostly Japan. The company has

been able to reduce the risk associated with its top five customers, by reducing their

contribution from 43 percent in 1996-97 to 35 percent in 1997-98.

Looking into the future, the company appears ready to jump to a higher

arena of global competition and deliverables. If the ADR issue materializes and Infosys

acquires a US company, it may find itself in a completely new situation with little prior

experience to fall back on. While failures could be punishing, the rewards would be

breathtaking. If all goes well, Infosys could well be on its dream run: think

India—think Infosys.