HfS Network

When Blood is Sikka than Water: Vishal's Infy Honeymoon has some Legs

December 25, 2014 | Phil Fersht

Vishal Sikka (pictured right) is CEO, Infosys Technologies

The most eye-opening personnel decision in the services industry this year has been the appointment of Vishal Sikka as Infosys CEO. I recently spent some time with Vishal and his executive team, along with some of the HfS crew, and we quickly noticed a marked uptick in their feverish enthusiasm for their business. Not only that - they seemed happy.

Was this really the same Infosys that was fighting to rediscover its mojo, or has it now got it back - in Vishal?  Indeed they seem to - and at the heart of it is the infectious passion, energy and insightful curiosity of their new CEO. The one who personally ensured the bar stayed open for a few extra hours so he could spend more time just relaxing with his staff.  But now we're almost 6 months in, surely the honeymoon is over?  It seems not, so let's hear more from Vishal himself...

Phil Fersht (CEO, HfS Research): Good afternoon Vishal – and delighted you’re happy to talk to our HfS readers… so what do you think of your new firm?

Vishal Sikka (CEO, Infosys): There’s an incredible amount of energy, and an incredible amount of passion. Yet in many ways, I get the sense that we lost some confidence along the way, and part of the job I see at hand is to restore that. To a certain degree, that loss of confidence is something that affects us broadly in the services industry in India…following orders and doing what we’re told to do, rather than thinking about and finding problems.

Another thing that strikes me is the company’s massive scale. We have multiple delivery centers, such as in Pune and Bangalore, each with more than 25,000 people.

A third aspect of which I’m incredibly proud is Infosys’ emphasis on education. People see us as an outsourcing company, or a services company, or an application development company. But in reality, learning and education are at the heart of the company. On my first day on the job, I visited our university in Mysore, and learned that we can put together a world-class training program for essentially anything under the sun in less than three months. And we can then immediately, simultaneously train 16,000 people in-person and through online education. That’s an amazing asset.

Also, while most don’t realize this, Infosys does an incredible amount of design work and writes tons of code for commercial products such as major airplane parts, and machines for the oil and gas, automotive, and other industries.

Finally, one of the most extraordinary things about the company is our beautiful and energy efficient campuses. The ones in Silicon Valley have nothing on ours. You can see on YouTube or Google how gorgeous they are, with man made water wells and lakes. They are like huge cities, and we treat them like that. What you won’t see unless you visit is that our incredible infrastructure team has built the world’s highest rated sustainable building in Hyderabad. In the summertime, Hyderabad gets up to 47 degrees Celsius (116 Fahrenheit), but we don’t use any air conditioning. Instead, we cool the walls, and thus the air, with water, as that is the most efficient cooling method. 

Phil: What do you think Infosys’ biggest challenge will be in 2015?

Vishal:Transforming ourselves culturally and operationally into a company driven by innovation, driven by delivering much more value add, more innovative services…what Prof. Mashelkar in India used to say,  doing more with less for more. That requires a very serious change in mindset, in our offerings, and in our operational processes. It will be difficult, but we have to do it. And the good news is that we are already starting to see signs of success in using that approach.

Phil: There’s a big theme about the positioning around software at this event. Can you give us a bit more of your thinking around that and where you’d like to take it?

Vishal: We actually live in a software-defined world, in every industry and in every walk of life. But while the word software has somehow become associated with products, this is not the point. Infosys is a services company, and will remain a services company. The entire point of the economy around us is the “As-a-Service Economy". And erstwhile product companies are looking to become services companies. So for us become a product company would completely miss the point. Our goal is to stay a services company and deliver, however we want to deliver more and more value using software, using IP, using reusability of components and capabilities across engagements. That is exceedingly important, and transformational. We do have many software assets, such as our Finacle banking suite and AssistEdge for customer service. But those software packages or products are surrounded by services.

Phil: There’s a very different mindset between a traditional software business and a traditional services business, Vishal, which you should know better than anyone with your SAP history. How are you going to approach that with Infosys? Are you going to try and find a meeting in the middle of these mindsets and cultures?

Vishal: Yes, we will be a services company that uses more and more software. Most other services-type industries have evolved into that. Think about healthcare. If you go to Stanford Hospital, you have a surgeon with a great context provided to him or her by Stanford. If the same surgeon showed up somewhere else, say in Kenya or India, it is still the same person but the surrounding context is completely different. On a recent flight back from China I watched the movie “Chef,” about a Michelin-star chef who ends up in a food truck. Again, it’s still the same person with the same capabilities, but in a different context. I think that the context we put around our people can be great amplifiers, can be great enablers for them to deliver tremendous non-linear value. Yet the mechanism of value is the service and the person who provides the service. So, it is not that we have become a product company, but more and more a high value delivering services company.

Phil: Let’s talk a little more about your idea of “Design Thinking”. You talked about thousands being trained on it. How far do you plan to take that?

Vishal: I’d like to take it as far as it can go, Phil. The whole exercise is about getting people to think openly about why a certain thing is not there. Customers come and tell me that they want this, they want advice from us on what they are doing and how they can do it better. They ask if we see something in their processes that can be done better. I recently spoke with a customer who asked about completely touch free invoicing. While he was focusing on the fact that his company has 40 percent touch free invoices, I said the real question was about the remaining 60 percent.

The reality is that companies don’t know what their problems are. It’s our job to be innovative and more open to helping our customers find and identify problems. And to become more confident that while we don’t know what tomorrow’s great problem or opportunity is going to be, we will help our customers find it. And then, of course, once we find it, our education, our knowledge, and our background gives us the tools to solve it. We’ll go after it and solve it together. Design thinking really is about that. In the 1950’s, when Polya wrote his book on problem solving, problem solving was the big deal in education. Now, I think it’s problem finding.

Phil: So Vishal…  you’ve been ordained the emperor of the IT services business for one week. What the one big change would you make?

Vishal: Get the company, and the industry, to focus more on innovation. Today, most businesses see a tremendous disruption, a transformation, happening to their industry, to their company. They are interested in solving tomorrow’s problems, and that requires us to be problem finders, not just problem solvers. That requires us to become people who can help companies become innovative and relevant. My strong desire is to get the IT services industry out of this downward spiral of progressively lowering cost, jamming people into the supply chain faster and faster from worse and worse colleges, and shoving them into projects faster and faster. This is the wrong direction. Instead, doing more with less for more is a much better idea. That’s what I would love to do.

Phil: Vishal Sikka - thanks for your time today - and look forward to hearing from you in 2015.

(Vishal Sikka was appointed CEO of Infosys in June, 2014 - his bio can be accessed here)

Posted in: Business Process Outsourcing (BPO)HfSResearch.com HomepageIT Outsourcing / IT Services

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1 Comments

19 Comments

  1. Manish Mehta
    Posted Dec 25, 2014 12:29 AM | Permalink Reply

    Hmm...it is interesting to compare the two conversations (Shibu-mojo and this one).

    One sees Outsourcing as a continuum, the challenges in tech driven innovation for Infosys and the difficulty to foster collaboration, best practices within a siloed vertical driven business; the other sees a period of great change, a discontinuity maybe and the potential to find new problems in verticals and use the learning organization engine to help solve these.

    Both see the big potential to build IP driven and software driven service models with 'ReUse' at the core. Both recognize that core cultural elements are foundational to any change/strategy as eventually it is the people that will be transformed in enabling the organizational change. And that you cannot do that by going down the vicious cycle of cost cutting forever.

    In the sum, Infosys is no different from all the other Indian players; And so if you look under the hood you have to ask the question - How do you run a steam engine on diesel combustion? Since it was not designed all these years to be a software/IP assets based services business, how do you do it now and what is it going to take? And so if you look at the marketplace you have to ask the question - If as buyers are going to shift their behavior across industries and the new growth businesses (digital, cloud, analytics, BPaaS) are unable to replenish the legacy yet, where will margins and topline performance go from here?

    No easy answers, there are more questions to ask too..more scenarios to discuss.

    The gap between great expectations and reality !

  2. Phil Fersht
    Posted Dec 25, 2014 07:19 AM | Permalink Reply

    @manish - good insights, and I do agree the similar challenges face all ambitious service providers, not only the Indian-heritage ones. To the point here, while we can all visualize where the industry is heading, we also need to consider that this is a 5-10 year evolution. Just look at how many enterprises still use mainframe computers and are slaves to on-premise ERP... Infy needs to have one foot in the present to protect its traditional (and legacy) business and make the right investments to grow its 5 year+ horizon businesses. I see a very level playing field across the providers right now - the next phases of development are crucial - acquiring and developing the technology-enablement consultative talent, building out the platforms, creating the right partnerships. In addition, other areas are evolving, such as robotics and IoT... the biggest threat is the sheer multitude of options and ensuring the right path is followed. Vishal has a substantial warchest at his disposal... let's see how he invests it moving forwards. The main thing for now is he's got the culture back on track and is developing a future vision - two elements that I believe are critical today in services,

    Cheers, PF

  3. Chris Thompson
    Posted Dec 25, 2014 05:22 PM | Permalink Reply

    Nice interview. "The mechanism of value is the service and the person who provides the service".

    This sums up the industry in a nutshell. However sophisticated the software apps, the technology, the cloud, the ultimate differentiator is the quality of the people, their knowledge and their ability to service their customers' needs.

    Chris Thompson

  4. Gaurav
    Posted Dec 25, 2014 06:37 PM | Permalink Reply

    Phil - great interview. A refreshing, pragmatic approach from Vishal in an industry that is over-complicating itself.

    Gaurav

  5. James Hart
    Posted Dec 26, 2014 08:15 PM | Permalink Reply

    Great interview. Like the ideas about Infosys being a services-led business that develop products from Vishal. I am looking forward to seeing how the firm gets on next year,

    James

  6. Ramesh
    Posted Dec 26, 2014 10:01 PM | Permalink Reply

    Phil,

    Good interview and always refreshing to read your blog! Do you think Vishal can really change things at Infosys - it's one thing talking a good game, but does he have what it takes to leads a major services business?

    Ramesh

  7. Rob Bradley
    Posted Dec 27, 2014 06:50 PM | Permalink Reply

    Greetings Phil,

    Interesting discussion and good to see Vishal Sikka bringing new ideas and energy to Infosys. You mention a warchest - where do you think they will invest?

    Rob Bradley

  8. Phil Fersht
    Posted Dec 27, 2014 07:09 PM | Permalink Reply

    @Ramesh, thanks for the kind words. In my view, Vishal has two core elements to get right: 1) To protect the existing (traditional) services business and ensure Infosys can stay with the market leaders, reassure clients the firm is over its 2012-13 uncertainties, and 2) To build the future vision and convince the world of his ideas of Infosys being a services-led firm with great software assets and expertise.

    In other words, this is about having one foot planted in the present and one in the future. But remember that most clients today care about the next 6-12 months with services. They like vision and new things coming to add value, but ultimately it's about what a provider can do for them TODAY.

    Personally, I believe Vishal is a strong visionary and his wealth of experience in the software industry will be crucial for the medium-long term strategy. His immediate challenge is placating the investors, clients and keeping the financial ticking over. This means he needs an experienced services leadership team under him to make this happen. His choices of people who can articulate - and challenge - his vision are going to prove the critical factor here.

    Infosys' biggest challenge, in the recent past, was developing the right leadership team to tackle the changing environment - so far it's taking shape and he's already making some strong (and brave) choices. His next challenge is balancing the "today" with the "future"... this will take some time to unravel as investment decisions are taken, clients are won, lost or transitioned out... and his vision is tested against real actions and performance.

    PF

  9. Phil Fersht
    Posted Dec 27, 2014 07:48 PM | Permalink Reply

    @Rob - good question and I am not going to deliver a complete diatribe on where service providers should spend their money! However, there are three elements where any ambitious service provider needs to be effective in the As-a-Service world:

    1) Replicable software assets. This is where Vishal brings most experience, and I expect a "build and buy" approach. Vishal will be making decisions in areas where he feels the firm can develop their own BPaaS-led platforms (such as the developments already underway with EdgeVerve). Am anticipating activity in the CRM/marketing and procurement domains as horizontals and the financial services industry. Am more expecting Vishal to invest where Infosys is already strong, as opposed to making move to buy into whole new areas where they have a weaker footprint;

    2) Consultative "tech-enablement" talent. This is critical, in my view. All the leading outsourcers have IT development and maintenance expertise in space - these are bread and butter commodity skills. Where the winning services firms will emerge is in having the deepest array of talent which can enable business processes to be more effective in a digital environment, where they can be self-learning, smartly-automated and well serviced by analytical/creative staff. This is a "buy, retrain and hire" approach, with an emphasis on the buy. I believe Infy should make a move for a leading consulting entity, such as a Booz, which can really position the firm - at scale - as a consultative player with a deep outsourcing infrastructure. Tech-enablement consulting + analytical talent + processing and platform delivery is the future.

    3) BPO. Simply put, BPO has been a bit patchy for Infosys. While there have been strong performances in areas such as analytics, marketing, procurement and financial services, the business hasn't grown as much as it should have in recent years, especially in F&A, which is core for an IT-BPO powerhouse in the Global 2000. I believe 2015 could be an interesting year for some consolidation in the BPO space and it wouldn't surprise me if Infosys is looking at some traditional BPO assets to bolster it's current business. Take a read of our previous post for some suggestions =)

    PF

  10. Raghu
    Posted Dec 29, 2014 02:01 PM | Permalink Reply

    Greetings Phil, Nice title!

    It is good to see Vishal's thoughts about current problem areas, "…following orders and doing what we’re told to do, rather than thinking about and finding problems." , "design thinking" and "problem finding" ... however, to protect the existing/ continue services business Infosys delivery teams has to follow orders.

    Will have to wait and see what his actions will be.

    Did you get a chance to discuss on any details with his delivery executives, on how part?

    Often seen, management reluctance on finding/ discussing the real problem with customers and attributing them as non-practical to solve. Can refer it as an act of protecting the existing/ continue services business. Interesting to see how it will be done in Infosys.

    Cheers, Raghu

  11. Phil Fersht
    Posted Dec 29, 2014 10:16 PM | Permalink Reply

    @Raghu - from what I am picking up from the executives, there is a major sense of urgency to get onboard the "design thinking train". Also seeing a good degree of maturity and patience as Vishal assesses what Infosys needs. He could easily have hired all his cronies from SAP etc on day 1, but clearly he knows he needs people to challenge him and the right mix of services/software brains to take the company forward.

    I believe 2015 will be a good year for Vishal and Infosys...

    PF

  12. Venkat
    Posted Dec 31, 2014 12:24 AM | Permalink Reply

    Very nice interview and nice toughts shared.. Good thing is, when you have a leader like Vishal who motivates with lot of positive energy and innovative direction, all the past with not positive and survival comments will be shelved (or already ?)..

  13. Allison
    Posted Jan 02, 2015 09:51 AM | Permalink Reply

    Very interesting interview, Phil. "Doing more for less for more" - so simple yet profound I had to Google Mashelkar - the world needs gandhian engineering and the type of innovation Vishal discusses. But are we really ready for it?

    1) Where will the talent be found to execute this? Yes, people can be trained to a degree, but fundamentally, this kind of thinking comes from a type of mind that is rare - one that is both left and right-brained and lives in the intersection of art and science. 2) Where will he find willing customers? It takes a humble, flexible and bold corporate culture to be open to real problem-finding.

    Refreshing interview and perspective; I hope that he is given the time needed to find the people and customers who are able to respectively deliver and partner for this level of innovation and change, because it is the future.

  14. Phil Fersht
    Posted Jan 02, 2015 06:37 PM | Permalink Reply

    @Allison - you've hit the nail on the head with the challenges here. The watchword, as I've been harping on about, is "one foot in the present, one in the future". Simply put, these challenges facing both service providers and enterprise clients require a fundamentally different approach over the long-term:

    Talent: Today the availability of sufficient creative / analytical talent is simply not there. It needs to be nurtured and trained - not just from ambitious providers and enterprises, but also from the universities and education centers. I expect to see a major rationalization of talent from the providers over the next 24-36 months as they wean out those that can't change their approach to how they work, and also a major recruitment of young talent from the colleges who are coachable in the new mindset. And this isn't just an issue for services - it's a societal issue with knowledge work. The shift from human to digital is on, and we need to develop our talent to embrace the re-invention of processes and business practices. Transactional roles are diminishing, being automated and simplified. History has shown that people adapt to the changing needs of the labor market - they have to. Just look at how people are already remarketing their capabilities on their CVs and LinkedIn. Suddenly the job market is more about what people can do, than who they work for...

    Customers: These talent challenges are not confined to service providers seeking to differentiate themselves, their clients are (and will) be forced to follow suit. In my view, this creates a host of new opportunities for providers which have the talent and tech enablement acumen, as many of their clients struggle to change how they run their operations. The bigger question is where the "burning platform" will come from to drive the appetite to reinvention. This will come from disruptive competition from "born in the cloud" firms who are not shackled by legacy technology and operations, businesses from emerging markets with much lower running costs... and an economic downturn (when it comes).

    Net-net we are at a transition phase in the world of operations and services. Service providers need to invest significantly in the As-a-Service talent they need to succeed, which will entail some cannibalization of their own revenues, while their clients know if they simply maintain a transactional set of processes, they will eventually be automated out of existence...

    Interesting times :)

    PF

  15. Tim Norton
    Posted Jan 05, 2015 08:58 PM | Permalink Reply

    Phil, your Christmas post/response said it all and I am glad you framed it that way. While all the talk of automation, cloud, XaaS is really cool, at least initially understandable, and full of apparent value, the fact is many if not most of us clients still have a sizable legacy environment that is not going away any too soon. Vendors who abandon this area in hopes their clients want all the new stuff may be in for a big surprise. I think they need solidify their current clients, increase that market share and then take the ride (if not lead the ride) with those clients to the new world. That ride could be a year or could be 5-10 years as you state above. I don't think the past is gone yet for Infosys. I am actively watching however and anxious to see the depth of change.

  16. Durgesh
    Posted Jan 06, 2015 04:56 AM | Permalink Reply

    Thanks Phil, Very refreshing. Feels even better, coz I work for Infosys.

    Regarding your point about “non availability of talent” however, I have a different view. The design thinking mindset has been there in India for many years. Growing up in small towns and cities, I’ve seen people using these skills for small entrepreneurial ventures. People have to be street smart and think on their feet otherwise it’s difficult to survive in very competitive Indian markets.

    Many organisations have used this talent resulting in frugal innovation. We have many examples like Tata Nano – The cheapest passenger car and India’s Mars Mission - on a budget of $74 million .

    Somehow, we lost this in Indian IT Industry. I guess, due to the hay days of outsourcing when it was easy to get revenue, thanks to labour arbitrage. But now things have to change.

    Interesting times indeed :)

  17. Manish Mehta
    Posted Apr 25, 2015 04:56 AM | Permalink Reply

    20B in 2020; Is Infosys going to go off the beaten track and do a big bang acquisition in this year? Put that 5B or more war chest to use finally....Any thoughts?

  18. Phil Fersht
    Posted Apr 25, 2015 10:12 PM | Permalink Reply

    @Manish - a succession of midsize software IP buys is my prediction

    PF

  19. Manish Mehta
    Posted Apr 26, 2015 03:28 PM | Permalink Reply

    Yes. I was also thinking along similar lines of the TCS-IBM picture you paint - a bigger fish too - Genpact? - to help support the mainstream Infy business and quieten the market (to provide the cover for a few quarters maybe or even more).

    I was deliberately ignoring the obvious possibility that the 20B+ in 2020 goal is just a casual sound bite/slogan as that then creates another worrying thought..

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