The upbeat earnings posted by India's second largest IT firm, Infosys, for the June quarter has raised expectations that it is possibly on track to regain its lost ground in the industry.
"The current quarterly results of Infosys demonstrated to the world that it is back on the path to restore its former glory," Sanjoy Sen, Doctoral Research Scholar, Aston Business School, UK, told The Economic Times.
Once the bellwether of the country's $150 billion IT sector, Infosys has been struggling of late to sustain its market share due to lack of innovation and fierce competition.
However, various restructuring measures initiated by its CEO Vishal Sikka to transform the company into a next generation technology services provider seem to be paying off.
"Infosys is a great franchise, we had certain issues in the past, but now we have a strong leadership team led by Sikka. He is driving a great company in a right direction," said Vikas Khemani, CEO, Edelweiss Securities, in an interview with ET Now.
In dollar terms, revenue growth of Infosys went up 4.49% to $2.25 billion in the April-June quarter, exceeding analysts' estimates by nearly $40 million and reaching its highest level in the past 15 quarters.
"The 4.5 per cent revenue growth this quarter generates confidence about achieving the projected numbers. That could lead to a surprise on the positive side," said Dipesh Mehta, SBI Cap Securities.
While announcing its results for the March 2015 quarter, Sikka had said that the company aims at boosting its revenues to $20 billion from the current $8.7 billion over the next five years.
Infosys also aims to improve employee productivity by 50% in the next five years. The software major estimates employee productivity to increase to $80,000 by 2020, compared to the current $52,500.
In pursuit of Vision 2020, Sikka seems to have started taking steps towards efficient usage of company's workforce to improve margins, as employee costs account for a significant part of the total operating costs.
The company is said to planning to place its experienced employees evenly across 23,000 projects currently being executed by the company. The step is aimed at reducing the high number of experienced staff in some projects and moving them to other projects, thereby rationalising costs, Livemint reported.
"The several realignments and acquisitions made in the last few quarters to enhance topline and bottomline have finally offset the disruption caused by the exit of its co-founder-leaders," added Sen.
The Bengaluru-based company appears to have already realigned experienced employees across 2,000 projects, while moving about "8-10% of senior executives" from existing projects to new projects.
In addition, Infosys reported a sharp decline in attrition rate to 14.2% in the June quarter against 23.4% in the same period a year ago, indicating that the employee-friendly measures initiated by Sikka are paying off. In addition, the employee utilisation rate soared 160 basis points to 80.2%.
Infosys' volume growth of 5.4% during the June quarter was also its highest level in the previous 15 quarters, while Tata Consultancy Services (TCS) posted a volume growth of 4.8%.
Infosys is also eyeing Indian start-ups for investment as part of its strategy to provide technology solutions to companies that are experiencing "new-age" problems.
Infosys also increased the size of the start-up fund by five times to $500 million in January this year. Besides, Sikka has allocated $250 million for investment in Indian start-ups.
