Narayana Murthy dispels doubts over Infosys 3.0 plan

BANGALORE: NR Narayana Murthy said there is room to bolster revenues from Infosys’ products, platforms and services division, a unit that was perceived as being relegated to the background after his return to the company six months ago.

While announcing the launch of a new software platform TradeEdge, Murthy who returned as executive chairman in June, said there is an opportunity to derive much higher revenues from the PPS business, compared to traditional services such as developing custom software for corporations and maintaining their computer networks.

“Our desire is that products business will help improve our per-capita revenues,” Murthy said. TradeEdge is Infosys’ third software platform aimed at retail firms in emerging markets.

It is used by over 10 clients, including Procter & Gamble. For the Bangalore company, the PPS unit contributes about 6% of sales. In 2011, Infosys said it expects to get at least one-third of its revenues from PPS over the next five years.

Products and platforms are an integral part of Infosys chief executive SD Shibulal’s ‘Infosys 3.0’ strategy which focuses on deriving higher revenues from innovation and intellectual property rights. Murthy said while it is difficult to say when PPS will contribute 30% of revenues, the company’s attempts are certainly moving in that direction. “These are the instruments that will drive the growth.”

He said faster economic growth, proliferation of mobile phones and rise in the amount of data in emerging markets will drive the growth of TradeEdge, which is aimed at connecting retailers with their distributors in emerging markets such as Asia Pacific and Latin America.

The new platform, which is being used in over 70 countries, will facilitate faster on-boarding of distributors to retailer networks, improve product order management, and reduce wastages, according to the company. Analysts, while being optimistic, are taking a wait-and-watch approach to its attempts at driving more revenue from its products division.

“This is just one platform. We will have to wait and see for a couple of years whether this will become as big as they think,” said Sandeep Muthangi, vice-president at equity research firm IIFL Institutional Equities. “Infosys product business has been doing reasonably well. This could result in some traction, but one product alone wouldn’t make a significant change.”

Incidentally, the launch of the new platform comes at a time when analysts say the company has been moving employees from units such as Finacle, Infosys Labs and PPS to billable projects. In June, Murthy had said Infosys will refocus on bread-and-butter business. He said the PPS business is certainly open to acquisitions.

PPS global business head Sanjay Purohit said two of the 10 clients who use TradeEdge are using it in India.