Innovation could lead to higher profit margin
India-based (EPI) (INDA) Infosys (INFY) appointed its CEO, Vishal Sikka, in 2014 in a bid to turn its business around. Under Sikka’s leadership, Infosys has focused on automation and the high-margin Digital Services segment.
Infosys won $809 million of total contract value (or TCV) in large deals during fiscal 1Q17. Sikka stated that these deals give Infosys “access to a broader canvas of client operations where we can apply our software in automation, in reduction of complexity, bringing together fragmented knowledge of data or understanding dependencies across systems.”
Driven by automation and innovation, Infosys’s traditional services such as application development and maintenance, infrastructure and cloud services, product engineering services, and software testing grew above the “firm average,” according to Sikka.
Collaboration with Microsoft and Amazon
In fiscal 1Q17, Infosys expanded its relationship with Microsoft (MSFT) in product development and legacy modernization. Infosys announced a strategic collaboration with Amazon Web Services (AMZN) to help its clients transition from mainframe and legacy systems to a modern cloud-based platform.
Infosys also announced an investment in Trifacta, which develops software for data management and data wrangling.
Important metrics for fiscal 1Q17
At the end of fiscal 1Q17, the total employee headcount for Infosys stood at 197,050. Although attrition was higher at 15.8%, the “high performer attrition” improved by over 200 basis points YoY. Revenue per employee showed an improvement from fiscal 4Q16 and totaled $50,897 for the quarter.
Sikka noted, “Of course, we want this to be on a much higher trajectory, going forward; and this is where automation and innovation will continue to play a key role.”