Don't get distracted: Infosys CEO Vishal Sikka's letter to employees

Infosys CEO Vishal Sikka has sent a letter to the company's employees. The letter talks about the changing environment for Indian IT services companies, automation and more. It also dwells on the Indian IT giant's strategy to tackle these.

Friends,

Over the last few weeks, many of you have reached out with your observations on the things going on around us, the clear signs of a changing context for Infosys and the IT services industry, and in particular the Indian IT services industry. To say that we are living in interesting times would be an understatement, and we now feel a collective sense for the massive transformation that is in front of us, and the unprecedented transition of the services industry that must happen. The things we had articulated 2.5 years ago are becoming starkly clear -- downward spiraling prices in the short term, automation of many roles in the near to mid-term, and now a new broader global context that will influence all of these things along the way.

In this new context, our strategy remains clear – we will focus on delivering higher value services, on doing things that our clients themselves could not do, nor what any software package on its own could do. We will bring the latest advances in technology, including embracing and leveraging AI, and we will bring this together with the unparalleled skills, and the creative confidence, of every Infoscion; and in doing this, we will create a massive movement in the services industry. Not because “digital” has become the latest fad, but because every aspect of our lives, and every aspect of every business, is being disrupted by technology. And we as

Infoscions

have the opportunity to embrace this disruption, to help our clients create a truly digital future, and as part of this, we create unprecedented value for clients, employees, shareholders, and the larger global ecosystem in which we operate — including delivering value as one of the largest and most respected companies in India.

We see many positive signs of this in 9.4% constant currency revenue growth during the first 9 months last year, 1.3% yoy growth in revenue per employee, similar operating margins over last year despite many headwinds. Additionally in the last 2.5 years, we have significantly bridged our margin deficit against others in our industry, we have seen massive reduction in attrition and doubled our large deal TCV and 200M+ clients, and saw the addition of 5 new 100M+ clients. Our revenue growth which previously underperformed the industry growth by 50 percent approx 2 years ago, is now in line with overall industry growth, and we have held margins through operational efficiency improvements and automation benefits. Our cash flow generation continues to be amongst the strongest in the industry. And in a key sign of a thriving enterprise, our new software and services have seen tremendous growth. Our top 10 new software and services (Mana, Skava, Edge, Panaya, Cloud services, Cloud Migration, Mainframe Modernization, API economy, BI Renewal and Cyber Security) now produce more than $110M+ in quarterly revenue, from ~22M in Q2 FY15, and seven of these did not even exist then. While we should all be proud of these numbers, we must keep in mind that these results are but footprints, consequences, of our work. The short-term milestones are simply those, and they point to our progress on our longer-term path.

But it goes beyond the numbers. We know that culture change is at the heart of any large scale transformation, and I am particularly encouraged by the change we see at the grassroots level in our teams. This is where innovation can be seeded, cultivated and cared for, and then grown at scale. This is what Zero Distance is all about – creating an innovation culture as the soul of the company, through the passionate, dedicated teams of design-thinkers on the ground, working side by side with clients to deliver value. To some, it was a bold statement to say that every Infoscion can be an innovator, that all should be empowered to go beyond the SOW. This is not bold at all – it is a recognition of the great human potential in all of us.

And we see tangible signs of this. In looking through the ZD projects today on my flights to Cincinnati and then to Atlanta to meet clients, while nearly 100% of the projects have ZD plans, I saw that 80 projects fall under the “walk” category that I talked about at the end of 2016. You will recall that at the end of Dec, I had challenged everyone to consider how we might apply the notion of fly, run, walk, crawl, to our work. Fly in this case -- a total digital transformation of our clients' business processes; the aspirational goal of ZD. Run meaning a new process, refurbished apps. Walk -- a new process, with the same apps. Crawl -- the same process, same apps, but accelerated using automation, using implementation excellence, using tools like AssistEdge, etc. I challenged everyone that we should not miss the point on innovation, that it has to be about the greater value, not just doing something incrementally for the sake of doing it.

And now we have 80 projects under walk! While this is a pretty small number still, this is what it is all about - grassroots change taking hold, building and growing. This is what our clients care about. Value. Going beyond. This is delivering value in a new context, with the same integrity and ethics and ethos that we have always had. A new context which requires us to be more.

So, as we head into the second half of Q4, let us keep a sharp focus on the execution of our strategy. Let us not get distracted by media speculation that is designed to stir up gossip or rehash old rumors or speculate on the unknowns, around visas, or anything that questions our commitment to governance, integrity and values, in order to generate headlines and create, in the words of The Wire, Eardrum Buzz. There is no second-guessing our deep commitment, passion and dedication to transforming this great company, even within the unprecedented new context that we find ourselves in. We are doing this. We will do this. Together!

Best,

V