Bengaluru: Infosys Ltd, the country’s second largest information technology company, has appointed Anantha Radhakrishnan as the chief executive of the company’s business process outsourcing subsidiary, in an attempt to revive growth of the unit, which grew at 0.8% last year.
Radhakrishnan was earlier the chief operating officer at the unit.
Anup Uppadhayay, the previous head of Infosys BPO, has been appointed head of strategic sales programs and will work with Mohit Joshi, who has been tasked to improve sales effectiveness of Infosys’ offerings. Joshi, one of the three Presidents, is also the head of banking and financial business unit at Infosys.
An Infosys spokesperson confirmed the development.
Radhakrishnan’s appointment comes amid Infosys’s plan to bundle services offered by the BPO unit with its own. The sales team at Infosys BPO, around 100-strong, will work with their counterparts in IT services, while the delivery side will continue to work like before.
Infosys’s decision to align the sales teams at its BPO and IT services, according to many equity analysts, is logical as, globally, companies from large banks such as Citigroup Inc. to retail behemoth Wal-Mart Stores Inc. want their IT vendors to offer their entire range of services, Mint reported on 12 May.
Under chief executive officer Vishal Sikka, Infosys is in the early stages of a turnaround, with the Bengaluru-based company recording industry-leading 9.1% growth in dollar terms (13.3% in constant currency) in the year ended 31 March.
However, Infosys BPO and EdgeVerve division, the products and platforms subsidiary, underperformed. Infosys BPO’s revenue rose just 0.83% to $465.5 million, 4.9% of the company’s $9.5 billion revenue.
The new sales strategy is part of Sikka’s effort to revive the fortunes of its BPO division, which employs more than 32,000 people.
Until 2013, Infosys BPO grew faster than the IT services firm. Over the past two years, though, it has struggled for growth, and slipped behind the BPO units of TCS and Wipro.
TCS’s back-office unit is now close to four times the size of Infosys BPO.
At the core of Infosys BPO’s inability to scale up business is the division’s failure to generate more business from existing clients. Its 10 largest clients accounted for about 38% of total business at the end of March last year, compared with 41% at the end of March 2014. Worryingly, it has been forced to drop prices to win new clients, which is hitting profitability.
Infosys BPO’s operating profit after interest and depreciation, expressed as a proportion of sales, slipped to 18.1% at the end of March last year, compared with 18.7% at the end of March 2014. Figures for the year to March 2016 aren’t available.
Infosys BPO started as a joint venture, Progeon, in April 2002, with Citibank Investments holding a 26% stake. Infosys bought Citi’s stake in 2006 and renamed the company Infosys BPO, a 100% subsidiary.