Infosys Limited, formerly Infosys Technologies Limited is an Indian multinational provider of business consulting, technology, engineering and outsourcing Services Company. Infosys Ltd. is an IT company that spends a lot on research and development. In last three years, Infosys have spent 2.1 percent of its revenues constantly on research and development, which is best in IT industry.
Infosys Ltd, is country’s second largest software exporter, and now leads in the number of patents filed by any Indian information technology (IT) services companies. According to the data compiled by equity research firm Barclays, the Indian firm filed 159 patents in the US Patent and Trademark Office (USPTO) during the last five years.
Infosys, traditionally an IT services company, now has 20 products and platforms (PPS) and the space employs 10,000 people, “equivalent to a small to medium-sized global product firm”, writes Bhuvnesh Singh of Barclays Equity Research.
The only IT Company that dominated Infosys, worldwide in patent race is Accenture. Accenture filed 345 patents in the same duration.
The report given by Barclay’s Equity Research, dated 24th September, 2012 stated “Infosys’s investments into a non-linear business model, its ongoing creation of an IP portfolio and its aggressive five-year revenue growth target imply that it has gone well beyond preliminary steps towards gaining meaningful scale.”
The research was carried out on USPTO, which is a free database and easily accessible in public domain. This database was chosen to bring uniformity in results and report also said that “This also becomes pertinent because the largest client concentration for the Indian majors is in the US”.
Infosys earns 6% revenues from its products and platforms and it wants to take that to 33% in 5-7 years. “Infosys’s target pegs the growth rate (for PPS) at 39-58% annually (under different scenarios for total revenue growth), implying that the PPS strategy (non-linear approach) could be the single most important growth driver for the company over the longer term. This would also set a low threshold for growth for the conventional IT services offering, allowing the company more flexibility to maintain and improve its margin profile,” says the Barclay’s Equity Research report.
Infosys also said that it is necessary for IT companies to look at a larger product play. The growth of IT industry decrease from 30% to 12-14% in last ten years.
Infosys’s Finnacle have already been successful in banking sector. It was used in Airtel Money. Another application by Infosys is Flypp which is used to engage consumer brands and customers across digital channel.
Barclays said that the initial success of Infosys’s non-linear strategy might be due to large number of patents filed. Barclays also said that Infosys have a head start over other Indian IT companies. The patents filed by Infosys consisted of patents to business process improvement (44 patents), software performance and architecture (28 patents) and data communication.
Infosys was once a pioneer in IT industry, but in last few years it had lost its credibility due to bad performance. But recently it acquired Zurich-based consulting firm Lodestone for $350 million, and showcased its products and platforms business and this have changed the behavior of analysts toward the company.
Barclays also stated that Infosys is not alone in the move towards non-linear business, and other Indian IT services players have also made progress towards non-linear business. However, Barclays also said that “In most cases the nature of the non-linear initiative, the scale reached and targeted are not as apparent as we believe it is for Infosys.”