Infosys plans stock options to incentivise sales force

IT major Infosys plans to introduce stock options as part of its sales incentivisation strategy as it focuses on generating more revenue from existing clients.

At the BofA Merrill Lynch Global Tech Conference in the US on Wednesday, Infosys CEO Vishal Sikka said, “We are focusing on sales efficiency and mining accounts,” while admitting that the company had significantly underperformed in this respect. Account mining is a key strategy for Indian IT services companies that typically generate over 95% of their revenue through repeat business.

Sikka said Infosys was also in the process of hiring a new human resource head, a post that has been vacant since April as incumbent Srikantan Moorthy had moved to a different role.

Sikka said Infosys has improved its win percentage in the last 10-12 weeks, bagging six major deals of over $50 million each. He added that the company was working on improving its operational efficiency given it has lagged on many fronts.

On the overall demand environment, he said there was strong momentum in the healthcare, retail and manufacturing segments. It expects volatility in the energy vertical to diminish before the end of this year.

As for geography, Infosys has spotted major opportunities in Germany and China. “We have a great presence in Germany and we think it can be 1 billion euros easily,” Sikka said, though he did not provide any timeline for the target.

Infosys also expects a big opportunity in China, where it recently announced a $120-million investment to set up a new development centre.

Sikka expects the second half of the fiscal to contribute more through innovation.

The Infosys CEO has been at the helm of an automation drive within the company. He said significant work has been done in the last nine months, especially in service lines such as infrastructure management and maintenance.

Infosys also plans to invest heavily in start-ups and setting up incubators. The company has already created a $500-million fund to invest in startups and half of this amount will be invested in India.

The IT major, which currently has an operating margin of 25-26%, expects to reach 30% in the long run through the use of new technologies.

Infosys Technologies Limited