Murthy’s comeback crisis call – Perspective from Greyhound Research

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Shibu understood what Infosys 3.0 is, but unfortunately the company has not delivered any thought leadership that the market needed from them. Infosys has had a problem in stepping out of their comfort zone, Sanchit said.

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Transcript of the interview has been shared below. Article was published on June 1, 2013 in

 NR Narayana Murthy’s return to Infosys as executive chairman is a crisis call as MD and CEO Shibulal has failed to deliver the mandate, feels Sanchit Vir Gogia of Greyhound Research.

“They have been working in traditional pricing models and have not been able to deliver the new outcome based pricing model and newer innovations that the market needed,” he said in an interview to CNBC-TV18.

According to Gogia, the traditional problem with Infosys has been of adopting practical sales approach than a strategic one. He feels that the company has not been able to use existing client base and cross-sell to them aggressively. Though the company has been talking about lot of acquisitions and filling gaps, but has not succeeded much on that front.

But, with Murthy coming in, Gogia is hopeful of seeing strategic acquisitions and how the company develops its second tier management, which has failed to execute.

Below is the edited transcript of Sanchit Vir Gogia’s interview with CNBC-TV18.

Q: What are your first thoughts on decision taken by the Infosys board? NR Narayana Murthy coming in as Executive Chairman, intestinally and this is for the first time that we have actually seen a family member of the founders making his way into the company, Rohan Murthy will be joining as the Executive Assistant, his term coterminous with NR Narayana Murthy.

A: This is a crisis call. Shibu has failed to deliver the mandate. We have seen and heard Shibu over time that he has understood what Infosys 3.0 is, but unfortunately in my humble opinion they have been little too late. They have not really delivered any thought leadership that the market needed from Infosys. Infosys has had a problem in stepping out of their comfort zone.

They have been working in the traditional pricing models and have not been able to deliver the new outcome-based pricing model and newer innovations that the market needed. Also another critical problem that I feel is that while they have a great strategy in Infosys 3.0, but ultimately the three board member team can only do so much to deliver. It is second tier management which will really need to execute.

Unfortunately, Infosys has not really developed the theme of second tier management which is entrepreneurial risk taking and that is where we have seen the execution fail dramatically. They have been a little too late to the party. They have been quoting overcoming margin issues in the market. They have not invested in the right software sets which are critically needed to overcome these issues.

Even if you look at some of the recent sales that they have done in the market, they have been very point solutions. They have not been able to use existing client base and cross-sell to them aggressively. The traditional problem with Infosys is that they have been very practical in their sales approach and not really strategic enough. If you see them in the past as well they have been very conservative. They have spoken about doing a lot of acquisitions and filling the gaps and still they have not made much news in the market.

Q: With KV Kamath coming in there was a lot of belief in the market that perhaps this would be a way for Infosys to become more acquisitive and be a lot more aggressive in the marketplace. There has been a lot of talk recently about the possibility of Infosys being in the race for Polaris’ services business. Do you see any of that changing now?

A: Unfortunately you do not have much of a choice. You have to go out and fill the gaps. Today you cannot be a point solution provider and just be best in your own game. You have to go and acquire. We are hoping that Murthy will be able to turn around the ship and get some new acquisitions on the board. They have a lot of gaps in terms of market offerings and they have not been able to deliver that at all in the recent past.

The decision makers have also evolved and a lot of the conversation I have with Infosys’ buyers in the market. They only have a CIO level sale. Today the decision makers are the broader CXO community which is CMO and CEO level. That is a very critical market to be in. They have not been able to make in their mark in the broader CXO community.

Q: What would you like to hear from the company in terms of the strategic changes they would like to make? As you have pointed out and as several other of our guests have also pointed out they have fallen short on several parameters and expectations have not been met, the promises have not been delivered.

A: I would love to hear some strategic acquisitions being happening and how they are ready to execute in the market. How they are developing the second tier management and the focus will be on execution and having the most strategic level of sale and how they really plan to go about doing that.

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SVG 200x200About The Author: Sanchit Vir Gogia is the Chief Analyst & CEO of Greyhound Research, an independent IT & Telecom Research & Advisory firm. He also serves as Founder & CEO of Greyhound Knowledge Group that operates under four brands – Greyhound Research, Greyhound Sculpt, Greyhound Technocrat and Greyhound Vivo. To read more about him, click here.

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