New economy turns to old for boosting growth
Sowing seeds of change, new economy is turning towards the old and is looking groundwards for growth. Agriculture may seem like an unglamorous business for the technology services industry but it is being fashioned as the next big revenue earner for Infosys, accounting for even $100 million accounts with many such deals in the pipeline. The vertical has not yet been transitioned into a separate business vertical for Infosys and comes under the larger ambit of manufacturing, but its importance is growing by the day for the IT services company.
?Agriculture is big for us and a fantastic business,? Ashok Vemuri, head of Americas and global head of manufacturing and engineering services, Infosys, told FE in an exclusive interview. According to Vemuri, agriculture has proved to be a very good launch vehicle for Infosys to get into other related businesses like chemicals and fertilisers, supply chain, packaging, and retail. The company would typically work with an ecosystem of companies like Monsanto or Syngenta that work on the philosophy of ?from soil to table? including improving the crop yield, creating hybrid food, etc. ?This will also help us to get into other growth markets as everybody is looking at feeding the world,? Vemuri said.
Besides having clients contributing over $100 million in revenue annually, Infosys has also been bagging deals in the range of $20-25 million from the agriculture segment with agri companies looking for predominantly advanced technology solutions to run their business. ?We have set up an analytics data hub for an agri business company to help them provide real-time information on the distribution of crops, kind of yields and various other things,? Vemuri said. Today, Infosys has got clients from the agriculture sector spread across US, Europe and Brazil.
The low penetration or use of outdated technology in the agricultural segment has enabled companies like Infosys to provide new-age solutions based on their portfolio of products and platforms. The manufacturing vertical accounts for around 22% of Infosys’ revenue with an annual contribution of $1.5 billion. For the three months ended September 30, the manufacturing vertical recorded a quarter-on-quarter growth of 2.8%.
Agriculture is a sub-segment within the manufacturing vertical with the other key areas being industrial, mining & metals, automotive and aerospace. ?The manufacturing segment needs significant business transformation and is amenable to change towards using our products and platforms portfolio,? Vemuri told FE. Infosys has also found some early success from the manufacturing segment with its 3.0 strategy by launching a cloud ecosystem hub and has signed over 20 deals in this space. Though the manufacturing segment might seem being predominantly outside of the US in regions such Europe and China, the Infosys official said there are certain shifts which would bring back the pre-eminence of the US in certain areas.
Vemuri said the US is the cheapest source of energy with the automobile sector picking and a company like Boeing having an order backlog for the next eight years. In order to move more aggressively into the manufacturing segment, Infosys is looking to hire more people from the industry, revamping its sales force and taking in people who have the experience of selling products and solutions.