Infosys sees huge opportunity in cloud and digital business

Infosys, BP sign MoU to strengthen relationship
Infosys, BP sign MoU to strengthen relationship

The total market size of cloud and digital services globally, which is currently $410-$450 billion, is expected to jump to $830-$890 billion by 2027

Infosys will continue to focus on expanding its capabilities in the areas of cloud and digital business as the company sees a huge opportunity, chief executive Salil Parekh said on Tuesday.

Parekh said the total market size of cloud and digital services globally, which is currently $410-$450 billion, is expected to jump to $830-$890 billion by 2027, clocking 14-16% annualised growth, despite on-going concerns around inflation and the geopolitical tensions in Europe.

“We will fine-tune some of that focus (on cloud and digital). We have a huge opportunity to gain market share because of good capabilities built till now and we will continue that in the current cycle,” Parekh said during the company’s annual analyst day event.

Digital revenue at India’s second largest software exporter rose to 59.2% as of March 2022 from 25.5% in March 2018.

“We see a strong demand outlook and overall strength driven by cloud and digital will sustain even through macro environment concerns,” he added.

On attrition, Parekh said, as start-ups have been facing funding issues of late, the company will see a smaller outflow to the start-up ecosystem.

“That (start-ups) was one source where we saw employees going towards. We will see a small number be reduced from the overall attrition as that ecosystem seems more fragile,” he said.

ET reported last week that almost 20% of India’s start-up workforce of 420,000 left to voluntarily join the IT-BPM ecosystem over the past year following the recent uncertainty looming over start-ups.

For the January-March period, Infosys has faced the highest attrition rate amid the top five Indian IT companies, at 27.7 per cent.

The Bengaluru-based company revealed five strategic elements to chase growth — scale cloud business, continue intensity in digital, accelerate next generation seeding (areas such as digital natives, expand Europe business, and build capabilities in new tech areas like metaverse and Web 3.0), focus on advanced automation and modernisation and give importance to people (employee) care and their career development.

Cloud disrupting business models

Infosys said its Cobalt services suite gives it the upper-hand to capitalize on the cloud-related disruptions. It has over 300 industry solutions and 60 digital services, out of which 25 services have annual revenue run rate of over $100 million.

While digital solutions can solve macro problems like inflation, supply chain bottlenecks and labour shortage, its subset cloud services are changing the way IT service providers operate, said Ravi Kumar S, president of Infosys.

“This is a big shift in how we see business. Historically, system integrators saw technology-related spends of enterprises as their universe. We could really pivot to business operations (as the universe). We have reached an inflection point as we can now give ‘as a service’ or ‘outcome’-based models to clients because of the cloud,” said Kumar.

Leveraging subcontractors, restructuring employee pyramid with more freshers and automation, the company will also tap into operating margin levers such as offshore-onsite mix.

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