Currently the Infosys has about 1,000 customers but a lion share of revenue comes from just 250 of them.The IT companies have increased starting building platform and products but most targeting existing customers to get more business revenues as said by Vishal Sikka.They want to change the building mass-use software like he did in his previous stint at SAP.
The Infosys want to built the standalone software in order to met the world class requirement by targetting with 250 clients as quickly run out of scope without producing a lot of revenue,so the software has go to outside our services and outside our clients.
“We are in early stages, but ultimately we have to go to tens of thousands of clients.
We are one year away from formulating a strategy on this, but this is the long-term goal,” Sikka said.
Building such a standalone software would not be easy and sold without services component and that will make great deal of investment to develop internally and companies do not begin to recoup investments for several years.
At an analyst conference in November, Sikka highlighted the challenges the company would face in making such a shift.
In a pure software business, the kind Sikka was in charge of at SAP, a company could fund transformation initiatives out of its existing cash cow products. But for the IT sector, the core business is itself under pressure and the existing automation software that is being built is unlikely to help in the long term as the downward pressure on price will continue.
Sikka said he wants to continue to work on the software plus-people model to improve the company’s productivity but additionally build software for other use cases.
“And in parallel, build that same software that improves our productivity, to go out there and build other use cases, which are high-margin, next-generation use cases like bitcoin, block chain, internet of things, artificial intelligence,” Sikka told the analysts in New York.
“These kinds of high-margin, next-generation, intelligent applications built on the same automation platform that helps us improve our productivity. There is no other way.”
Analysts say while a software led strategy has merit, executing it will not be easy. “Selling software/platforms is also very different from selling IT services. Companies have to resist the pressure to customize their product for each client,” said Sagar Rastogi, an analyst with Ambit Capital. “Finally, building software requires predicting market needs, a year or more in advance. Dr. Sikka might have that skill, but few IT services veterans would.”
Convincing the stock market to back heavy investment that will cut into existing margins would also be a hardsell.
“One approach to succeed could be to spin off the products business into a separate company like Infosys did with Onmobile BSE 2.23 % in the past,” Rastogi added .
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