Infosys looks at platforms as biz, to take it to new customers

Infosys, India’s second-largest software exporter, is planning to take its software platforms to a larger set of customers and earn 10 per cent of its revenues from them by 2020.

Infosys earns nearly 95 per cent of its revenues from traditional services and has been pushing software-led services to clients, using platforms such as the artificial intelligence tool Mana and cloud-based commerce platforms like Skava, Edge and Panaya.

The company has a revenue target of $20 billion by 2020.

At the end of December last year, 5.6 per cent of Infosys’ revenues (nearly Rs 2,876 crore of Rs 51,364 crore) came from such platforms and software products. “The platforms business offers us to scale disproportionately unlike increment growth in traditional services. We have used it internally, taking it as a service to our customers,” Pravin Rao, chief operating officer, Infosys, told Business Standard in an interview. “We have around 1,000 customers. But the universe is huge.”

For example, Mana, an artificial intelligence-based platform or software, helps enterprises automate its processes using data from machine and human experience.

Industry experts say Mana, while it is offered to its clients within the main software service to enhance productivity, can be sold also as individual software through a licence-fee model.

Infosys’ Skava is a mobile-first platform that helps retail businesses in digital marketing and customer engagement using cloud-based applications. Given its guidance, announced on Friday, to grow between 8.4 per cent and 8.8 per cent, the company should add $800 million to its 2015-16 revenue of $9.5 billion.

This suggests Infosys has to achieve faster growth to add another $10 billion in three years. “While Mana can be used as an automation tool across the company’s verticals, it can potentially grow as individual automation-based software too, thereby giving additional revenue. I don’t think any other tier-I IT services player is working on such a model,” said Pareekh Jain of HfS Research, a global information technology research firm.

Jain, however, says Infosys has a long way to go. “If such a software-only model is followed, there should not be limitations for third-party implementation on the client’s side.”

IT services players say that legacy software maintenance services, which continue to be the core business of India’s four big firms, are seeing continuous pricing pressure.

The digital-technology business, led by cloud-based services and artificial intelligence, is seeing faster growth. But, for Indian players, digital-technology growth is not offsetting the pressure on traditional side.

As the company chalks out a go-to-market strategy to monetise the digital-technology platforms as independent software, Rao says it will need more such platforms.

“We can’t just have four platforms, we need more. There are thoughts on this and we will formalise in our strategy meet in March on how to take this in a bigger way.”

Ever since Vishal Sikka took charge as chief executive officer, an analyst said the company’s repeated position has been that only traditional services will not help it achieve growth. “Productised services will allow Infosys earn revenues beyond the per employee per hour model, thereby impacting the overall growth.”