Infosys premises growth plans on R&D

19 March 2012

NEW DELHI: Infosys, the Indian IT giant, is focusing on innovation as it seeks to create new products rather than simply providing services.

In a statement, the company said it is pursuing a strategic model it calls "Infosys 3.0", premised upon making a shift away from focusing on fields such as offshoring IT functions to developing its own valuable intellectual property.

As part of this process, the organisation is set to double the size of its R&D team to 1,000 people over the period to 2014. Building digital tools will be an area of particular focus.

"Innovations in social media, cloud [computing], mobility and 'big data' are opening new doors for businesses globally," Subu Goparaju, head of Infosys Labs and product R&D, said in the statement.

"We will pioneer unique approaches to accelerate innovation, enhance product architectures and shorten release cycles in line with market needs, which are driven by global mega trends, including digital consumers, emerging economies, new commerce and healthcare."

Among the products and services Infosys has developed to date are systems for improving supply chain management, a cloud computing platform for joint use by retailers and consumer goods companies, and personalisation software for ecommerce sites.

The long term objective for Infosys will be to derive a third of revenues from the sales of products, which can be measured against the current total of 5%.

Infosys conducts detailed analysis to determine its brand value every year. The firm reported that this figure had reached $8.1bn in 2011, compared with the $7.3bn logged in 2010 and $6.4bn posted in 2009.

Sundararaman Viswanathan, engagement manager at Zinnov, the consultancy, suggested that the formulation of a new business model would be essential if Infosys is to make further progress.

"With IT services getting commoditised and with pricing and margin pressures building, non-linearity and differentiation become vital," he said.

Ankur Rudra, an IT analyst at Ambit Capital, the investment management group, also warned that few services companies have effectively made the transition into making products.

"Just a division in the company having a different mindset might not help, while the core leadership team remains services focused," he said.

Data sourced from CIOL, Infosys, Hindu Business Line, Times of India; additional content by Warc staff