This Article is From Jul 21, 2015

The 'Vishal Sikka Effect' Seen in Big Infosys Results by Analysts

The 'Vishal Sikka Effect' Seen in Big Infosys Results by Analysts

File Pic: Infosys CEO Vishal Sikka

A business revamp initiated by Vishal Sikka, the first non-founder boss of Infosys, helped the IT major declare its best results in nearly four years, say analysts. Chief Executive Sikka took over a year ago. Today, shares of Infosys surged 15 per cent after the Bengaluru-based company announced its first quarter results, raising its closely watched U.S. dollar-denominated revenue estimate for the year.

A new strategy formed by Dr Sikka helped win more large deals in the first quarter, fuelling a 5 percent rise in net profit.

"Efforts in redesigning our clients' experience and our widespread adoption of innovation, both in grassroots and breakthroughs, are starting to bear fruit in large deal wins and in the growth of large clients," Dr Sikka said in a statement.

"It looks like a year's work is starting to bear fruit for Vishal Sikka, CEO Infosys and his team," wrote widely-tracked freelance journalist Den Howlett.

"He [Mr Sikka] seems to be making progress," Kotak Equities Kawaljeet Saluja was quoted as saying in Financial Times. "His first priority was to get more out of existing customers and win more big clients as they try and work out their digital strategy...but there is still a long way to go before you have complete confidence that they have turned the corner."

Infosys, India's second biggest outsourcer, has in recent years struggled to innovate and retain market share due to a staff exodus that also hurt its ability to win big deals. But in April-June, the company added 79 clients taking its total to 987. Client wins included a multi-year contract from a major German bank for application maintenance services, digital and mobility services, package implementation, and testing services.

With today's results, Infosys has reported faster growth than industry leader Tata Consultancy Service or TCS; its order growth rose 5.4 per cent from three months prior, the most in nearly five years. That was bolstered by a surge in demand in the United States, its biggest market, where the company is also listed.

TCS had earlier this month reported a 3.5 per cent growth in its revenue.

Unlike his predecessors, 48-year-old Dr Sikka Dr Sikka has signaled more openness to acquisitions that fit the company's strategy. Infosys expects to generate $1.5 billion in revenues from acquisitions by 2020.

Infosys posted Rs 3,030 crore ($475.85 million) in net profit in the quarter. That beat the Rs 2,886 crore in profit the company posted a year earlier, and roughly matched the Rs 3,020 crore average estimate of 27 analysts, Thomson Reuters data showed. Revenue rose 12.4 per cent to Rs 14,354 crore, Infosys said.

Staff attrition, or the number of employees leaving or retiring, was 14.2 per cent, from 23.4 per cent a year earlier.