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DQ Top 20:#3 Infosys Technologies

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DQI Bureau
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With a 30% increase in revenues in FY2014, Infosys, the IT services major, showed signs of improvement compared to the previous fiscal when it posted a humble 14% revenue growth. The company retains its 3rd position in the DQ rankings.

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A significant development in fiscal 2014 was Narayana Murthy making his second stint as executive chairman in June 2013.
Quite clearly, Infosys has been struggling on many fronts. Attrition has been on the higher side, organizational structure has been undergoing changes, and its performance has been lagging behind some of its competitors.

A big concern for the company was the exits at the top level. After Murthy's return, it has witnessed a spree of senior management exits, signaling fresh waves of turbulence hitting the company. The company saw V Balakrishnan, Board member, Basab Pradhan, Global Sales Head and Ashok Vemuri, America's head, moving out of their respective roles.

Overall attrition rate was around 19% at the end of March 2014, around 2% higher than the previous year.
There were some important organizational changes. The board adopted a two-president governance structure appointing BG Srinivas and UB Pravin Rao as Presidents.

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In his second tenure, Murthy introduced three initiatives-cost optimization, improving sales effectiveness, and improving delivery effectiveness.

The strategy was to work on the vision articulated in Infosys 3.0 and on strengthening focus on the core area, Business IT Services (BITS).

Around 98% of consolidated revenues came from repeat business, while 238 new clients were added. The year saw Infosys striking some large deals. The company was selected by Volvo cars to provide application development services for its global operations. It also bagged an outsourcing deal from a large European bank to manage its overall applications portfolio.

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The new technologies space gained momentum with 20 new deals signed for cloud and big data offerings and 15 new deals signed for mobility offerings.

 

Looking at segments, financial services and insurance segment continues to be the most prominent with a 23% hike in revenues. In terms of percentage increase in revenues, life sciences and healthcare was ahead posting a whopping 44%. Across geographies, North America and Europe held the lion's share in revenues.

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Infosys has been pursuing the integrated platform solutions market quite aggressively, focusing on end-to-end solutions. New technologies including cloud, big data, mobility and functional areas such as HR and commerce continue to be the focus areas for products and solutions.
Of the three strategic initiatives identified, the company indicates that there are early signs of improvement in cost optimization, sales effectiveness and delivery effectiveness will take a little longer to deliver results.

With Vishal Sikka's recent appointment as the CEO, the company is hopeful of filling the leadership vaccum at the top and looks forward to a revival.

The outlook for FY15 looks better for Infosys as the new client additions and the expansion of the order pipeline augurs well. But its needs to be seen how much of a topline and bottom line impact the new clients will have on FY15. That apart the coming of the new CEO will also see a more independent strategy and by appointing Sikka, Infosys has also upped its ante on its corporate governance practices.

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