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Infosys reshapes, to split into 12-15 smaller business units

In a massive reorganization, Infosys is splitting itself into 12-15 smaller business units, each with revenue of $500-$700 million, its own sales heads and P&L (profit & loss) responsibilities. Currently, the organization is divided into four large verticals — banking & financial services and insurance, with $3 billion in revenue; retail & life sciences, with $2.3 billion; manufacturing & hi-tech, with $2.2 billion; and energy & utilities, communications and services, with $1.9 billion. Each of these will be split into smaller units.
The four verticals are headed by four presidents — Sandeep Dadlani, Mohit Joshi, Rajesh Krishamurthy and Ravi Kumar (in charge of delivery). These overarching responsibilities will continue. But under each of them, there will be a greater number of independent units. The exact number of units and heads of each are expected to be finalized by October.
“This will help us in better market penetration and in client management,” CEO Vishal Sikka said at a recent analyst meet in Pune. Sources told TOI that Infosys will also collapse some of the layers between the customer and the company to create sharper sales and delivery units. There are several layers between the two — project manager, senior project manager, group project manager, delivery manager and senior delivery manager, delivery head and service offering head. “Some of these will go to respond to client needs more nimbly,” one source said.
Chip Wagner, CEO of US-based IT advisory firm Alsbridge, said the new SBU (strategic business unit) structure allows for benefit of nimble and fast decision-making against the backdrop of a large company with a strong balance sheet and brand. “This model is exactly what EDS did in late 1980s and it was successful. After a strong period of success with the SBU structure, EDS then super-imposed a “group” structure on top of collections of SBUs and that, in my opinion, was the beginning of the end as it added bureaucracy and a large overhead cost layer into the mix,” he said.
Infosys, which was beginning to grow strongly under Sikka, posted a relatively disappointing performance in the last quarter. Sikka has since made several changes, including changes in executive responsibilities. “Ever since Vishal took over Infosys, the challenge has been to drive his strategic vision through the organization and to reignite the sales engine,” Tom Reuner, managing director of US-based IT research firm HfS Research, said. The suggested reorganization, he said, appears to be an acknowledgement of both these challenges and also “the changing ways in which companies procure services as they progress their journey toward the as-a-service economy.” The cloud and mobile have radically changed the IT environment, and services companies need to adapt to these quickly.

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