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Looking at Panaya-like acquisitions, says Sikka

By Bibhu Ranjan Mishra
March 06, 2015 12:21 IST
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Infosys CEO reinforces focus on automation & artificial intelligence

Infosys chief executive officer and managing director Vishal Sikka on Thursday said the company’s acquisition of Panaya last month showed it was keen to become a next-generation services provider by bringing in automation and artificial intelligence (AI). Infosys, he added, would carry out more such acquisitions in the future.

“We are extremely interested in acquiring companies similar to Panaya. We wanted to demonstrate this wasn’t just talk,” Sikka said, addressing the Morgan Stanley Technology, Media and Telecommunication conference in San Francisco.

The former SAP Technology chief, who took charge of Infosys in August last year, said the company had already started working on monetising the automation that Panaya had brought to the table in its practices such as SAP and Oracle, apart from introducing automation and AI completely in its business process outsourcing (BPO) operations.

Last month, Infosys had announced it was acquiring Panaya for $200 million (Rs 1,244 crore), the first acquisition by the company under Sikka and the new management. The San Francisco-headquartered Panaya, which has most of its engineers in Israel, provides technologies to automate repetitive and complex customisation works of packaged software such as SAP, Oracle and Salesforce.

“Panaya is a very innovative but small Israeli company that has looked into the pain of dealing with complex and large packaged systems — their deployments, configuration and dependency. It has done a tremendous job of understanding the underlying software and bringing that power of automation to simplify it,” Sikka said.

“We have 14,000 people in the Oracle practice and 13,500 in the SAP practice; with the power of automation, we can do much more with these people. So, we are monetising Panaya’s innovation in these practices, which will amplify the ability of the people to do more with less time.”

As part of its new strategy, Infosys has underscored the need for ‘renew’ and ‘new’ — renewal of its internal systems and processes using technologies such as cloud, automation and AI to align these with the changing needs of its clients and enter new areas. This is also true for clients who, apart from renewing existing systems and platforms, are also looking at dealing with anticipated next-generation challenges.

Under this strategy, Infosys has been training its employees on ‘design thinking’ and automation and, at the same time, strengthening its internal delivery mechanism to drive employees’ revenue productivity. At the end of the quarter ended December 2014, Infosys’s revenue per employee stood at $52,700, compared with $52,300 in the previous quarter.

Sikka said the company had already seen some success through the use of these tools in its BPO business; last month, this segment had introduced ‘forecasting and simulation’ as an add-on package to clients in the procurement space. Every year, about $100 billion worth of purchases by its clients in the procurement space flows through the Infosys team.

“My big idea with the ‘renew’ part is to bring automation and productivity improvement, AI to the existing service lines and to all the stuff we did. For us, BPO is about a $700-million business, with about 27,000 employees. So, we want to bring automation and AI to everything we do in BPO. That is because if we don’t embrace those, somebody else will. So, there is a tremendous sense of urgency to do that,” he said.

The Infosys chief said the innovation fund the company had set up would enhance its ability to be part of larger innovation by start-up companies trying to address complex problems of a larger organisation.

“Ironically, large IT companies are no longer serving the great IT needs of the world; those are increasingly being served by small companies. Yet, bigger businesses don’t quite trust small companies. We see ourselves playing an important role. First, by investing in those start-ups and participating in their financial success and second, by helping bridge the gap between start-ups and large businesses," he said.

Infosys has already carried out an investment through its $500-million innovation fund, investing $15 million in a spin-off of DreamWorks Animation. The company is also in the process of closing another investment in a company that develops cloud-based air quality detectors.

Sikka said while Infosys had two good quarters in terms of revenue and profit growth, some action being taken now would tale a “long time to bear fruit". “There is a phase in every company when a generational shift, happens. At Infosys, it happened somewhat abruptly — all the remaining founders of the company left when I joined. So it’s a generational change and there is a change in the attitude of the company," he added.

Pan of action...

  • Automation, artificial intelligence are keys to renew the company’s  existing business
  • Since October, 12,300 people have been trained on design thinking
  • Revenue per employee stood at $52,700 at the end of the December quarter of FY15
  • Investing in start-ups to help bridge gap between large and small businesses
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Bibhu Ranjan Mishra in Bengaluru
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