The Sikka effect

From leader to laggard and back to being the industry’s growth leader, Infosys, India’s second-largest technology outsourcing company, is once again being seen as the country’s IT services bellwether after it reported a good fourth quarter and a creditable full year under Vishal Sikka. The numbers tell the story. Ending the year with $9.5 billion in revenue, Infosys is within striking distance of the $10 billion landmark. Profitability is at 25.4 per cent and projected to stay thereabouts in FY17. The company did especially well in winning large outsourcing deals. Attrition, its biggest worry, continues to fall. And, for the first time in four years, it is guiding to grow faster than the industry in FY17.

The developments are good for Infosys and its stakeholders. Yet, to assume that, as the results season unfolds, the rest of the IT services industry will also report equally good short-term results and, more importantly, that all’s well with its long-term prospects, would be misleading. Infosys’ problems between 2011 and 2014 were peculiar to that company, as was evident in the divergence in growth rates between it and the rest. And the solutions that Infosys has found, too, are peculiar to it. Once again it is ahead of the curve in grasping and leveraging the future direction of technology, and is moving from herding automatons to heralding automation. It was what gave the company’s founder, N.R. Narayana Murthy, the confidence to recently disparage its own, and the industry’s, competitive advantage — the H1-B advantage. Leadership – Dr Vishal Sikka’s – has clearly made a huge difference. Will we be able to say the same of its peers Wait and watch.