Infosys

Last modified by Asif Farooqui on 2021/03/31 18:21

Contents

Overview
- Subsidiaries
Industry structure and developments
- COVID-19 effect
Business Strategy
Infrastructure
Financials
Recent developments
References

Overview

Infosys (NSE:INFY) is a global leader in next-generation digital services and consulting. The company enable clients in 46 countries to navigate their digital transformation.¹

With nearly four decades of experience in managing the systems and workings of global enterprises, the company expertly steer its clients through their digital journey. The company do it by enabling the enterprise with an AI-powered core that helps prioritize the execution of change. The company also empower the business with agile digital at scale to deliver unprecedented levels of performance and customer delight. The company's always-on learning agenda drives their continuous improvement through building and transferring digital skills, expertise, and ideas from its innovation ecosystem.

Subsidiaries

EdgeVerve Systems Limited
Infosys BPM Limited
Infosys Consulting Holding AG
Infosys Public Services Inc.
Infosys Tecnologia do Brasil Ltda
Infosys Technologies (Australia) Pty. Limited
Infosys Technologies (China) Co. Limited
Infosys Technologies (Shanghai) Co. Limited
Infosys Technologies (Sweden) AB
Infosys Technologies S. de R. L. de C. V.
Kallidus
Panaya
Noah Consulting, LLC

Industry structure and developments

Software and computing technology is transforming businesses in every industry around the world in a profound and fundamental way. The continued reduction in the unit cost of hardware, the explosion of network bandwidth, advanced software technologies and technology-enabled services are fueling the rapid digitization of business processes and information. The digital revolution is cascading across industries, redefining customer expectations, automating core processes and enabling software-based disruptive market offerings and business models. This disruption is characterized by personalized user experiences, innovative products and services, increased business agility, extreme cost performance and a disintermediation of the supply chain. ²

Leveraging technologies and models of the digital era to both extend the value of existing investments and, in parallel, transform and future-proof businesses, is increasingly becoming a top strategic imperative for business leaders. From an IT perspective, the renewal translates to re-imagining human-machine interfaces, extracting value out of digitized data, building next-generation software applications and platforms, harnessing the efficiency of distributed cloud computing, modernizing legacy technology landscapes and strengthening information security and data privacy controls

The fast pace of technology change and the need for technology professionals who are highly skilled in both traditional and digital technology areas are driving businesses to rely on third parties to realize their business transformation. Several new technology solution and service providers have emerged over the years, offering different models for clients to consume their solution and service offerings such as data analytics companies, software-as-a-service businesses, digital design boutiques, and specialty business process management firms.

While these developments present strong market opportunities for the IT industry, there is also an imperative need for IT services and solutions companies to transition from fast-commoditizing traditional service offerings, to attract and retain quality talent globally, to reimagine cost structures and leverage automation for increased productivity.

The COVID-19 pandemic has disrupted demand and supply chains across industries, negatively impacting the business of companies and driving the global economy towards a recession. Governments in several countries have imposed stringent lockdown in a bid to contain the spread of the disease. This in turn has forced companies to reconfigure how their employees work and how their core business processes are supported and delivered. These events could cause companies to pause and reprioritize their spending on technology and business process outsourcing. However, it is becoming evident that companies that have previously digitized their operations have been more resilient. Consequently, in the medium to long term, it is very likely that businesses will continue to spend on technologyrelated initiatives with a greater focus on automation, remote working, cloud-based applications, optimization of legacy technology costs, etc. Several sectors are also seeking technology-based solutions immediately to tackle the health and economic crises – notably in healthcare, life sciences, banking, telecommunications and essential retail.

COVID-19 effect

The impact of COVID-19 in the fourth quarter of fiscal 2020 on the Company was not significant.

The Company anticipates a continued slowdown in client technology spending in the near term, influenced by a broader global economic recession and impact to certain sectors. In the near term, this could result in continued lower demand for its services and solutions, especially in the area of discretionary technology-related spending by its clients. However, in the longer term, the company see increased opportunity for its business as enterprises accelerate their digital transformation initiatives.

With some impact due to project deferrals and softening of discretionary spends, there will be some margin pressure in the near term. In response to these new contours of projected demand, Infosys is working to optimize its cost structure and operational rigor to ensure execution excellence of its operations. Some of the activities initiated are :

Improve liquidity and cash management with a rigorous focus on working capital cycles, including collections, receivables and any other blocked cash. Leverage its debtfree Balance Sheet and a superior local currency credit rating of A3 from Moody’s if required
Reducing capital expenditures other than any committed or non-discretionary expenditures.
Accelerate operational cost optimization initiatives such as automation, employee pyramid rationalization, controlling onsite-offshore ratios, optimizing subcontractor and travel costs, deferring employee compensation revisions and promotions, delaying hiring of new employees.

Business Strategy

The company's strategic objective is to build a sustainable and resilient organization that remains relevant to the agenda of its clients, while creating growth opportunities for its employees, generating profitable returns for its investors and contributing to the communities that the company operate in..

The company's clients and prospective clients are faced with transformative business opportunities due to advances in software and computing technology. These organizations are dealing with the challenge of having to reinvent their core offerings, processes and systems rapidly and position themselves as ‘digitally enabled’. The journey to the digital future requires not just an understanding of new technologies and new ways of working, but a deep appreciation of existing technology landscapes, business processes and practices. Infosys's strategy is to be a navigator for its clients as they ideate, plan and execute on their journey to a digital future.

For fiscal 2021, the company will continue to execute its strategy along the same dimensions. The client market segments the company serve are faced with challenges and opportunities arising from the COVID-19 pandemic and its resulting impact on the economy. The company believe the investments Infosys has made, and continue to make, in its strategy will enable it to advise and help its clients as they tackle these market conditions, especially in the areas of digitization of processes, migration to cloudbased technologies, workplace transformation, business model transformation, enhanced cybersecurity controls and cost structure optimization in IT. Further, Infosys has successfully enabled most of its employees worldwide to work remotely and securely – thus achieving the operational stability to deliver on client commitments and ensuring its own business continuity

The company's solutions have been primarily classified as digital and core.

Digital :

Experience
Insight
Innovate
Accelerate
Assure

Core :

Application management services
Proprietary application development services
Independent validation solutions
Product engineering and management
Infrastructure management services
Traditional enterprise application implementation
Support and integration services

The company's products and platforms include:

Finacle®
Edge Suite
Infosys NIA®
Infosys McCamish
Panaya®
Skava®
Stater Mortgage Servicing Platform
Wingspan

Infrastructure

The company added 2.66 million sq. ft. of physical infrastructure space during the year. The total available space as on March 31, 2020 stands at 51.97 million sq. ft. Infosys has presence in 46 countries across 220 locations as on March 31, 2020.

Financials

On April 20, 2020 Infosys reported a 6.10 per cent year-on-year (YoY) rise in consolidated profit for the March quarter at Rs 4,321 crore compared with Rs 4,074 crore in the same quarter last year. Revenue for the quarter rose 8 per cent to Rs 23,267 crore.³

Infosys said considering business uncertainty emanating from Covid-19, it is unable to provide guidance on revenues and margins for FY 21 at this stage. It will provide guidance after visibility improves.

Operating profit margin came at 21.20 per cent in Q4FY20 against 21.40 per cent in Q4FY19.

Salil Parekh, CEO and MD, Infosys said, “The company had an exceptional year in 2020 with growth of 9.8 per cent and operating margin of 21.3 per cent. While the immediate short-term will be challenging, the company can see that there is a strong interest to consolidate with partners with high-quality and agile service delivery and strong financial resilience. I am confident the company will emerge from this stronger.”

The IT major also announced a final dividend of Rs 9.50 per share.

The company continue to remain focused on execution excellence in a period of high uncertainty. The company's relentless focus on liquidity will be supported by its strong balance sheet of $3.6 billion cash, backed by accelerated cost take-outs and operational rigor,” said Nilanjan Roy, CFO. He added that the final dividend was a testimony of a strong free cash flow performance for FY20.

The company had Rs 27,300 crore cash as of March 31, while it signed a $1.65 billion of large deals in January-March period.

Attrition rate for January-March stood at 20.7 per cent against 20.4 per cent last fiscal. Infosys had 2,42,371 employees as of March 31, against 2,28,123 for the same quarter ended last year.

“The company will honour all job offers made by the company,” Infosys said.

In dollar terms, revenue increased 4.5 per cent to $3,197 million. On the other hand, the figure inched lower by 1.4 per cent on a sequential basis.

Recent developments

May 26, 2020 Infosys announced a strategic partnership with Avaloq, a leading wealth management software and digital technology provider headquartered in Zurich, to provide end-to-end (e2e) wealth management capabilities through digital platforms. As part of the announcement, Infosys will be a strategic implementation partner for Avaloq’s wealth management suite of solutions to help clients modernize and transform their legacy systems into cutting-edge digital advisory platforms.⁴

Infosys will leverage its Global Delivery Model and a standardized approach to implement Avaloq’s solutions for clients. Avaloq’s specialized knowledge and experience in providing end-to-end wealth management solutions combined with Infosys’ global presence and digital transformation capabilities will help create a one-stop-shop for wealth management clients. Infosys will work closely with Avaloq to develop market opportunities beyond Switzerland and go to market capability for targeted accounts across multiple geographies. With an initial focus on EMEA and APAC regions, the partnership aims to offer e2e products and services as Software-as-a-Service (SaaS), private cloud or public cloud across the globe. Additionally, Infosys and Avaloq will jointly run specialized courses for Infosys experts to get enabled on the Avaloq platform.

Avaloq will also leverage Infosys’ delivery strengths including scale, its Global Delivery Model, its standardized implementation approach, proprietary Infosys tools, and accelerators to reduce the total cost of ownership for product implementation.

February 10, 2020, Infosys announced a definitive agreement to acquire Simplus, one of the fastest growing Salesforce Platinum Partners in the USA and Australia. Simplus is a recognized leader and advisor in cloud consulting, implementation, data integration, change management and training services for Salesforce CPQ and Billing applications.⁵

This acquisition, coupled with the acquisition of Fluido announced in September 2018, further elevates Infosys’ position as an end-to-end Salesforce enterprise cloud solutions and services provider, offering clients unparalleled capabilities for cloud-first digital transformation.

Simplus brings to Infosys globally recognized Salesforce expertise, industry knowledge, solution assets, deep ecosystem relationships and a broad clientele, across a variety of industries including high-tech, financial services, retail, healthcare, life sciences and manufacturing. It has offices across North America, Sydney, Melbourne, London, and a large delivery center in Manila.

Infosys Consolidated December 2020 Net Sales at Rs 25,927.00 crore, up 12.28% Y-o-Y ⁶

January 14, 2021; Reported Consolidated quarterly numbers for Infosys are:

Net Sales at Rs 25,927.00 crore in December 2020 up 12.28% from Rs. 23,092.00 crore in December 2019.
Quarterly Net Profit at Rs. 5,197.00 crore in December 2020 up 16.6% from Rs. 4,457.00 crore in December 2019.
EBITDA stands at Rs. 8,026.00 crore in December 2020 up 21.09% from Rs. 6,628.00 crore in December 2019.
Infosys EPS has increased to Rs. 12.25 in December 2020 from Rs. 10.51 in December 2019.