Infy plans unit for products biz; Finacle to be kept out

Written by fe Bureau | Mumbai | Updated: Feb 28 2014, 11:02am hrs
Infosys, Indias second largest IT services exporter, will create a separate subsidiary for its products, platforms and solutions (PPS) business in order to provide a focused approach to this segment, which is expected to be a game changer for the tech industry in the near future.

In a notice to the exchanges on Thursday, Infosys said, We are in the process of forming a new subsidiary for our products and platforms business, and we will be happy to share the specific details once it is formed. Finacle will not be a part of this subsidiary. We have created subsidiaries in the past as well to help us better serve our client needs. Our effort to create a subsidiary for our products and platforms business is an operational matter and is being pursued to help us deliver better value to our clients. Finacle is the banking product from Infosys.

Infosys has been planning to create a separate subsidiary for PPS, which contributes around 5.5-6% to its overall revenues, for quite sometime now. This change is likely to happen in the next financial year.

The creation of such a unit is expected to provide operational flexibility and autonomy to run this business.

Unlike the traditional lines of IT services business, where the input and output is measured on the allocation of human resources, the PPS segment requires to be handled differently as the focus is on creating intellectual property. The separate subsidiary of PPS will help further drive innovation for Infosys and bring in certain start-up buzz to this segment.

Infosys chairman NR Narayana Murthy in a recent investor call said that PPS is an important component of their 3.0 strategy to delink revenues from person month effort through intellectual property-based products, platforms and solutions.

The IT major also reaffirmed focus on the PPS business as it goes about reclaiming its share in the traditional large outsourcing deals under the leadership of Murthy.

This would be one of the major steps undertaken by Infosys in the last eighth months as it restructures the organisation to retain its competitive edge and get back on the path of industry leading growth.

Infosys as part of its long-term strategy has said that it is aiming at one-third revenue share each from its three main segments IT services, consulting & systems integration and PPS.

The IT major has already installed certain structures within the organisation to drive innovation. In April last year, it had announced setting up the $100-million innovation fund to invest in products, platforms and solution ideas in line with its 3.0 strategy. The company was also very clear that it will not be restricted within the organisation and would also be interested in investing in entities or individuals outside the company who have innovative technologies.