Constant reorganization: Although not necessarily directly related to Healthcare, the image at the top of this blog post shows that there has been a lot of top-level reorganization within Infosys over the past few years. Whilst it focuses on restructuring its internal workforce to position itself for future growth, it cannot properly focus on winning new business in Healthcare and will suffer from leadership inconsistency. If these recent changes weren't enough, Infosys recently announced that it will be once again restructuring its business from the 1st April 2015. Despite the potential benefits of this restructure such as enhanced flexibility, its clients may once again suffer. At a time when it is looking to renew core existing contracts, this is very inconvenient timing. Such is the desperation of keeping hold of these clients, the CEO himself is even taking charge of around a dozen top customer projects.
Underdeveloped solution portfolio: In the past year, Infosys launched just two healthcare-centric platforms; Clinical Trial Supply Management and Osteoporosis Solutions. Over the same timeframe, Infosys won only two engagements; a contract renewal with the District of Columbia for health information exchange (HIE) and an ERP deal for implementation services with L.A. Care Health Plan. Such lackluster effort for a vertical which it recognizes has growth potential is disconcerting, especially when you see competitors such as Cognizant and IBM make strides through acquisitions and expanded capabilities in strategic areas such as cloud. It can no longer rely on its previous BPO success and must innovate to just keep up.
Startup acquisition strategy: This seems to be a trend among many India-led IT service providers. They are looking to invest in the "next big thing" in order to bolster their innovation credentials and pull away from the pack. According to the Economic Times, Infosys has a $500m fund to invest in startups pursuing disruptive ideas. Due to Infosys falling behind the pack over the past few years, this is a survival strategy. It's reportedly failed acquisition of TriZetto to fellow India-led competitor Cognizant potentially exhibited an appetite for larger acquisitions but due to its investment in other startups, it looks as though it will stick with partnering in Healthcare. Meanwhile, Cognizant's acquisition of TriZetto is enabling it to pull away from the India-led pack and take a high-value-add approach with further onshore presence. Unless Infosys finds a diamond among the coal or invests in an established player, it may stay in limbo and be forced to rely on its network of partnerships to win business in Healthcare.
That's all for today folks! Many thanks for taking the time to read my blog, it's very much appreciated. If you did enjoy it and found it useful then please share it on social media as it would greatly help.
Best Regards,
Jonathan Cordwell
Research Analyst, Healthcare Strategy
ResearchNetwork, CSC
- Business Today, Missing Murthy, 17 Feb 2013, http://businesstoday.intoday.in/story/infosys-woes-profit-revenue-growth/1/191782.html
- Zacks, Infosys (INFY) to Restructure Business: Time to Buy?, 9 Feb 2015, http://www.zacks.com/stock/news/163721/infosys-infy-to-restructure-business-time-to-buy
- Times of India, Infosys, Wipro set to enter Rs 12,000 crore renewal ring, 6 March 2015, http://timesofindia.indiatimes.com/tech/tech-news/Infosys-Wipro-set-to-enter-Rs-12000-crore-renewal-ring/articleshow/46476526.cms
- TBR, Infosys PSBQ 4Q14, 2 Feb 2015
- Economic Times, Why Wipro, TCS, Infosys are wooing retail, healthcare startups and investing in them for survival, 11 Feb 2015, http://articles.economictimes.indiatimes.com/2015-02-11/news/59043865_1_startups-wipro-ceo-tk-kurien-silicon-valley
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