Infosys will not be holding its annual strategy brainstorming session Strap (strategy, action and planning) this year. Instead, new CEO Salil Parekh has chosen to make it an ongoing exercise with a smaller group of internal leaders.
Strap was attended by about 200 senior leaders in Infosys’ sprawling Mysuru campus last year. In the years before, even larger numbers would be part of it.
Peter Bendor-Samuel, CEO of IT consulting firm Everest Group, believes Parekh is trying to set his stamp on the organization. “He is also committed to avoiding the division and acrimony which has been the recent hallmark of Infosys. Hence he is attempting a more low key approach to internal communications and the canceling of Strap is one such example,” he says.
Last year, Parekh’s predecessor Vishal Sikka had turned Strap into a much tighter event, with more intense discussions among a smaller group to flesh out the strategy execution details. Strap would also normally come out with an internal growth target for the following fiscal, but last year, that exercise was not done, presumably because of the failure of its forecasting attempts in the preceding year.
Asked about discontinuing Strap, Infosys said it would not be able to offer any comments.
Sources told TOI that Infosys is trying to align its future strategy with the DNA of the organization, and deciding how it will pick and choose its battles to differentiate itself from its competitors.
Several analysts offered their views on what Parekh should do. Rod Bourgeois, head of research in US-based DeepDive Equity Research, said Infosys is at a major crossroad, and he thinks Parekh needs to choose between a 25 percent operating margin and the ability to fully invest in digital capabilities. “Given the price aggression we see by Infosys combined with the substantial needs to invest in digital and other next-gen capabilities, I think Parekh needs to consider a revision to Infosys' margin target,” he said.
Bendor-Samuel also believes Parekh should reset margin and growth expectations. But he does not think Parekh will do it. “He should lower both of these expectations to give himself and Infosys flexibility and running room to make this pivot (to establish itself as a leader in the new high growth digital marketplace). I expect he would like to do this but will be constrained by his board and investor expectations,” Bendor-Samuel said.
Both these analysts also believe Parekh should move a little away from Sikka’s product-oriented strategy. “I maintain that Sikka's aspiration to shift Infosys towards products reflected a flawed strategy, and Parekh should refocus Infosys back on being a client-service-oriented organization,” Bourgeois said.
Bendor-Samuel said Parekh is likely to emphasize a digital labour arbitrage focus, “which is a little different from Vishal's software defined focus.” Under this approach, Bendor-Samuel said, Parekh will emphasize Infosys’ superb talent and seek to retrain that talent to focus on the digital space, instead of Infosys building and owning the underlying IP (intellectual property). “Related to this move, Salil is likely to emphasize building a more robust consulting capability,” he said.
Phil Fersht, CEO of US-based HfS Research, said Parekh should determine Infosys' approach to digital – is it worth playing the mimicry game, or is there a window to attack the market with a different approach? “A lot of building blocks are there, but it is not as articulated and joined up when compared to Accenture, Cognizant and Wipro,” he said. Infosys, he said, needs to identify its competitive set and determine who it wants to emulate and who to compete with.
Fersht says there is also a deep-set culture in the firm that has positives and negatives. “Now is the time to remove the negative element which is resisting the change needed to move the firm forward,” he said. - TOI