Infosys to consider digital services revenues while evaluating top brass

31 July 2018 Authored by Consultancy.in

In a move that represents adaptation to evolving industry trends, Indian IT services giant Infosys has incorporated the firm’s digital revenue levels as one of the criteria to evaluate the performance of its senior leadership. Digital will be the common denominator for all executives, who will then be evaluated on other metrics based on their individual roles. 

Many of the concepts currently making the rounds in the world of consulting – including cloud-based solutions and transitions, incorporation of Internet of Things (IoT) applications, and operational optimisation through artificial intelligence – can all be broadly clubbed into the singular domain of digital services.

As an IT services firm, Infosys has found a large portion of its business dominated by these solutions, particularly given that its two largest markets of operation are India and the US, widely regarded as the two centres for the digital revolution. The firm has now indicated the significance of performing well in this domain, by making it a common evaluation criterion for the entire senior leadership.

Earlier this year, the firm unveiled a three-year strategy with the primary objective of developing its digital services segment. “The first year in fiscal 2019 to stabilise where we are, the second year to start to build momentum and (the) third year to start to accelerate where we can have more and more share of our clients’ relevance and that will obviously translate, overall, to a better Infosys,” explained Salil Parekh, who has been at the helm of the firm since the start of this year.

Infosys to consider digital services revenues while evaluating top brass

The strategy appears to have produced tangible results, given the fact that revenues from the firm’s digital services arm grew by 8% in the last quarter to reach just over $800 million, or nearly 30% of its total revenues. The figures keep it above other fast growing firms such as Wipro, but its revenue share for digital services remains well behind other competitors such as Accenture, which earns 60% of its revenues from the digital segment alone.

So, digital services will be a common performance indicator for all executives, while other indicators will vary. Parekh himself, for instance, will additionally be evaluated based on overall revenue growth, operating margins and the firm’s future development goals. President Ravi Kumar, meanwhile, will be judged on the fulfilling the US talent model and meeting the consulting financial plan.

“This calls for a fundamental transformation for the Indian IT industry, from helping Fortune 500 companies digitise their current business model to helping clients innovate digitally-enabled new business models. This shift is easier said than done. By linking executive compensation to revenues from digital business models, Infosys has taken the right step to secure its future," commented Jimit Arora, Head of IT services research fir US-based Everest Group.

He added, "Measuring growth in digital as a component of executive compensation is a good way to ensure alignment with shareholder objectives in a digital-first world, and ensure progress of the company as the traditional arbitrage-centric model faces pressure."

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