Evolving with changing times Annual Report 2013-14 Infosys Annual Report 2013-14 Narayana Murthy Executive Chairman of the Board Think big and act boldly Very few people get an opportunity to add value to a great These initiatives will improve our sales effectiveness, augment company a second time, that too after retirement. I am grateful to our delivery effectiveness, optimize our costs, and reduce risks K. V. Kamath, V. Balakrishnan, T. V. Mohandas Pai, Ravi Venkatesan, arising out of visa regulations and other external factors. As part and to my family for the role they played in my coming back to the of these initiatives, we have been focusing on strengthening our company. While the results of what we have set out to do are still brand, becoming more meritocratic and multi‑cultural, expanding far from being realized, this journey has been very exciting and our market coverage, enlarging our value proposition, quickening invigorating for me. In the process, I have got to know better many our responses to our stakeholders, sharpening our focus on extraordinary Infoscions in sales, software delivery, and business recruitment and training, improving our productivity, and cutting enabler functions. My office, the CFO and the head of Human down wasteful expenditure. These activities are work in progress Resources have played a seminal role in this journey. I record my and will take about two years to yield results. gratitude to these fine people, Kris Gopalakrishnan, Shibulal, I have travelled to our markets and our campuses, spoken to a large members of the Board, and to every Infoscion for their support, number of Infoscions, answered their questions, addressed their commitment, hard work, smart ideas and passion to enhance the concerns, encouraged their enthusiasm, and lent support to their Infosys magic. One thing is certain from my interactions. That is, enormous zeal to achieve aspirational goals. The enthusiasm, if Infoscions decide, they can succeed in reaching for the stars. commitment, energy and hard work of every Infoscion to achieve We have done creditably this year by doubling our revenue growth our goals are evident. I salute every one of them. At the same time, to 11.5% (in US dollar terms). Further, our operating margin let us remember the famous saying, “Growth is painful. Change is improved from 23.5% in Q1 FY 2014 to 25.5% in Q4 FY 2014. painful. But, nothing is as painful as staying stuck where you do This is laudable by any standard. I congratulate every Infoscion on not belong.” I request every Infoscion to think big and act boldly. this stellar performance. The task ahead is simple to state. It is to increase the competitiveness of Infosys in the market to achieve industry‑leading growth and margins. This goal requires us to attract, enable, empower and retain the best and the brightest talent and build a multi‑cultural workforce; develop leadership and succession planning; improve the agility of the company; and sharpen the accountability of our business units, business enabler functions, projects and individuals to deliver results. Evolving with changing times Infosys Annual Report 2013-14 S. Gopalakrishnan Executive Vice Chairman of the Board Evolving growth story Every business evolves as it grows, adds customers, introduces Our traditional BITS business slowed down, perhaps due to a lack new products, enters new markets, and forays into new business of focus. While our revenues grew, in US dollar terms by 25.8% in segments. And once in a while, the business context changes fiscal 2011, it dipped to 15.8% in fiscal 2012 and further to 5.8% significantly, making it imperative for the business to transform in fiscal 2013. As revenue growth declined, margins also declined. itself and adapt to the change. We now needed to focus on superior growth and margins again. We faced such a change in 2011. Mobile devices and computers The Board brought back Narayana Murthy as the Executive were becoming the primary devices for users to interact with Chairman in June 2013, given that there were leadership changes applications and information systems. Social media was creating also in the offing. He introduced three initiatives — to optimize new models of collaboration between consumers, businesses and costs, to improve sales effectiveness, and to improve delivery organizations. Businesses needed to be present on social media and effectiveness. We are seeing early signs of improvement in cost analyze the content to make intelligent business decisions. Cloud optimization. Sales effectiveness and delivery effectiveness will computing brought access to unlimited computing and storage on take a little longer to deliver predictable revenue growth. a pay‑for‑use model to the market. All these changes presented In 1981, when Infosys was founded, the retirement age new business opportunities for IT services providers like Infosys. (for executive roles) was fixed at 60 years for Founders. I will retire Hence, we set up separate units to pursue these opportunities. when I turn 60 next year. Shibulal is also set to retire early next For, if we did not pursue these avenues, we stood to lose business year. Infosys has rigorous leadership transition processes in place. in the medium to long term. The CEO transition is an important move that the Board has to act It is difficult to time technology disruptions perfectly. You either on in the coming year. With Murthy as Executive Chairman, the run the risk of being too early or too late. To balance our portfolio risk in the transition is reduced. of businesses, we announced the Infosys 3.0 strategy, where a third Thus, we have major transitions happening simultaneously. I am of our revenues would accrue from new technologies over time. confident that Infosys will be able to manage these and re‑establish Another one‑third would come from Business IT Services (BITS) itself as a leader in the IT services business. comprising Application Outsourcing, Infrastructure Management, Independent Validation, and Business Services Management, and the rest would come from Consulting and Systems Integration services. We underestimated the effects of the adoption of these new technologies and the change in the business model. These newer services created smaller projects since many of the engagements were pilots. They also changed the revenue profile since clients preferred a subscription model to buy Cloud services. Evolving with changing times Infosys Annual Report 2013-14 Next level of delivery excellence The former CTO of Microsoft, Ray Ozzie, once said, “I love Besides allowing distributed development, continuous integration, software, because if you can imagine something, you can build it.” and service virtualization, it also enables testing before the Having worked in the software industry for over two decades, completion of the entire solution. I can vouch for this. Creating good software is a craft. With 96% Infosys Command Center framework : Critical business flows of our projects delivered on time, and over 97% of our revenues within enterprises assume seamless integration of application and coming in as repeat business from satisfied clients, evidently this infrastructure across service providers. However, siloed monitoring craftsmanship has fueled the growth of Infosys over the years. is quite the norm. We believe that proactive monitoring of business Today, the way businesses consume technology services is events through data triggers and other non‑intrusive means can changing. Technology spends are no longer determined by a central ensure better preparedness to manage business events. Infosys IT budget, but are an integral part of every line of business. Command Center provides a centralized framework to integrate Traditional enterprise systems like compensation and benefits, and monitor business flows of various IT monitoring systems, and corporate travel are increasingly being procured as a managed service management tools and applications. business service, and consumed through a pay‑as‑you‑go model on Today, Social Computing, Mobility, Analytics and Cloud, popularly the cloud. This service efficiency model involves multi‑disciplinary known as SMAC or Digital, is making significant innovations teams, sometimes virtual, and combines business, technology, and not only in the consumer space, but also in the enterprise space. operations, into a single cohesive service offering. We work with these emerging technologies independently as well At Infosys, we build next‑generation service delivery models as collectively for the benefit of our clients : that drive efficiencies further. Agile, and fortified with process The Infosys Cloud Ecosystem Hub : We help our clients establish automation, tools, templates and accelerators, our delivery model and manage a scalable, hybrid cloud ecosystem, by collaborating enables better project execution, reduces costs, and guarantees with the right ecosystem partners to provide single‑point enhanced business value. Our market differentiators include : accountability. The Hub builds, manages and governs hybrid cloud Infosys IT Service Management (ITSM) platform : The ITSM ecosystems seamlessly. platform is an end‑to‑end solution that automates ticket resolution The Infosys BigDataEdge : This solution helps enterprises in and IT services management, resulting in improved resolution time analyzing Big Data to discover relevant information and develop and quality. ITSM has the potential to achieve over 25% services insights to make better business decisions