Infosys to unveil new metrics to evaluate progress of turnaround

Bengaluru: Infosys Ltd will outline some of the quantifiable outcome metrics to reflect the progress of the strategy of “new and renew” it has embraced under its new chief executive (CEO) Vishal Sikka, when the company declares its quarterly earnings on 24 April.

The Bengaluru-based company intends to share new metrics, including the percentage of Infosys’ customers who are using its new offerings such as open source technology platform, called Infosys Intelligent Platform (IIP), and artificial intelligence-led technology platforms, according to a senior executive.

For now, India’s second largest software exporter will not share details of how much money it is spending to beef up its capabilities in next-generation technologies, including artificial intelligence and automation, as it seeks to be become the next generation services company.

“(At the) end of the day, our focus will be (to share) outcome metrics than investments on internal…There could be like percentage of clients using new offerings, number of implementation of IIP could be another,” said U.B. Pravin Rao, chief operating officer, Infosys.

In the last few years, Infosys has underperformed its larger peers, including the country’s largest software exporter Tata Consultancy Services Ltd and Nasdaq-listed Cognizant Technology Solutions Corp. Although Infosys has retained its revenue growth of 7-9% for the current fiscal year, this is below the 12-14% growth estimated by industry body Nasscom for the country’s $130 billion information technology (IT) industry. To help Infosys retain the bellwether tag, garner more business and improve its operating margin, Sikka is trying to push the 34-year-old firm to embrace next-generation technologies, including automation and artificial intelligence.

“We will be most likely sharing outcome metrics more than the internal metrics. (So) like how many...people are working or dollar investments (in next-generation technologies), we may not be sharing it,” Rao said in an interview last week.

Rao, however, added that the management is still in the midst of preparing the strategy roadmap and still “debating” which metrics to share when it meets analysts and the media next month.

“We have outlined the strategy and communicated to people and are now at the level of execution. There is a lot of positive energy and people are excited about the strategy. Still, a lot of hard work is ahead of us,” said Rao.

Since taking charge of Infosys last August, former SAP AG board member Sikka has been pushing the company to embrace technologies such as automation and artificial intelligence, and trying to change the “mindset” of over 180,000 engineers by getting them trained under design thinking, a user-centric approach to help write beautiful and simple codes.

However, Sikka’s desire to put Infosys on the global software map as an innovation-led company seems to have started on a slow note, with the company’s engagement with customers in open-source and artificial intelligence projects accounting for a little less than 1% of its 23,000 ongoing projects, as reported by Mint earlier this month.

For this reason, some experts had hoped that the management could possibly share the investments in its new initiatives as it could have made other IT firms too to share more details.

“It seems that, for now, it will again be just a discussion more on projects that Infosys is working on for a small number of clients. It would have been great had the management actually shared what investments they are making internally too to make themselves future-ready,” said a Mumbai-based analyst working at a foreign brokerage, requesting anonymity. “Infosys sharing some of these investments could have made others too to come out with their investments (in these areas).”

To be sure, Infosys did introduce a new metric in its results for the October-December period, when it adopted a measure to evaluate the success of its innovation-related initiatives.

Infosys became the country’s first IT firm to introduce revenue per FTE, or full-time equivalent, which it believes will help it measure revenue generated by the employees working on a project, unlike the traditional method of tracking revenue per employee, which takes into account all employees, including engineers who are on the bench or undergoing training.

Rao also dismissed any talk of some company executives being unhappy after the recent management reshuffle that saw S. Ravi Kumar, the former boss of the cards and insurance business, being appointed head of delivery.

“You need someone 100% dedicated to delivery side as a lot of things are in the works. We are working on automation of services, bundling solutions in a better way, institutionalizing best practices. Ravi was inclined to come back to delivery and his delivery background and having worked across this space (made us appoint him),” said Rao, adding that Kumar, for now, is based out of the US but that the company will decide on his location in the coming months.

Rao said he was happy with how the company has managed to hold on to its employees with the number of engineers leaving the company every month having almost halved from over 3,000 in August to a little over 1,600 in January. He said it will take another “couple of quarters” before the company can have a stable attrition rate of “13-15%”. For the quarter ended December 2014, Infosys’ attrition rate marginally inched up to 20.4% from 20.1% at the end of the July-September period.