NR
Narayana Murthy's second innings at Infosys serves as a strong positive
for the company's shares at a time when it has become tough for the IT
company to post healthy growth amid competition and global demand
uncertainty.
His appointment as executive
chairman sends a strong signal to employees, clients, analysts and
investors that the board is serious about reviving the fortunes of a
firm that now looks lost in the fast-changing world of enterprise
technology.
For Murthy, who turns 66 in August,
the cause is noble but the task arduous. The global IT landscape has
changed significantly since he gave up executive responsibilities seven
years ago. The industry was still humming along on the labour-cost
arbitrage and the belief that the shift of jobs from the West to India
was both inevitable and sustainable prevailed.
Indian
IT companies were exporting $22 billion worth of products and services
annually . Industry body Nasscom estimates that this figure has more
than trebled as FY13 exports touched $79 billion. But unlike in the
past, when higher exports translated to more profits, the past year's
growth has come at a time of corporate pain and bloodletting.
Labour
arbitrage no longer exists as multinational offshore centres in India
are as big, if not bigger, than that of Indian companies. Identifying
and enhancing synergies in the client's business and assuming
transformational responsibilities while reducing the total cost of
ownership are among the key strategies that companies are using to
create a services differential.
Given his vast
experience and understanding, Murthy should be able to cope with the
changed industry dynamics. Murthy will also have to face competition
from players such as Cognizant and HCL Technologies, which were
relatively modest firms, when Murthy hung up his boots.
Today,
Cognizant has overtaken Infosys in terms of revenue size and HCL Tech
is leading the infrastructure-management segment, the line of business
which has shown higher growth than traditional IT services. What could
pose as a bigger challenge, however, is Infosys' own growth in the past
seven years when Murthy was not serving in an executive role. Against a
revenue of $2.1 billion when he quit, the company garnered $7.4 billion
in FY13.
The number of clients has increased to
nearly 800 from 460. The client size has also increased substantially.
While it reported 15 clients in FY13 with $100 billion or more in
individual billings, there were none in FY06. Murthy will also be
addressing a far bigger — and perhaps more disgruntled — workforce that
is 1.6 lakh strong, against 52,700 in FY06.
He
is also not very much in touch with the youth of Infosys, as he has
pointed out while announcing the roping in of his son on the board.
Addressing the key human resource issues should be at the core of
Murthy's strategy, given the company's relatively high attrition levels.
No comments:
Post a Comment