Q&A: Navigating digital disruption risks
We asked Deepak Padaki, EVP Strategy and Chief Risk Officer, Infosys Limited, to share his thoughts about the disruptive trends that are challenging the strategies of corporates across the globe, yet also present many opportunities for growth.
“When we reviewed our strategy about two and a half years ago, we first reached out to several of our clients coming from several industries, like financial services, insurance, telecom, retail, manufacturing, energy, and so on, and we talked with a variety of their executives to understand their priorities. The summary of those discussions had two takeaways.”
“The first takeaway was that all of them were looking at using digital technologies to disrupt themselves. Most of Infosys’ clients are incumbent organisations; that is companies that have been around for several decades sometimes, and they are all being challenged by digital natives, new companies that have no legacy issues to deal with. And so it was clear that the focus on technology was not for just the CIO or CTO but increasingly moving towards the business. That was one important takeaway for us as a technology service provider.”
What was the second takeaway?
“The second takeaway was that these companies came to us and said, ‘it’s not just about finding a shiny new shoe but it’s also about polishing the old shoe’. There are lots of tech consultants who say you should do this brand new thing because otherwise digital native companies will come and eat you up. But incumbent companies have invested in their processes, their people, their technology, and their culture for many decades, and you can’t throw this away because it still generates 80-90% of their current cashflow. This was an important insight for us. How do you go from one place to the other? It’s not just about the new place, it’s also about what you do with the old things and that renewal is very important.”
What happened next?
“It was these two things that got us thinking and inspired us into create our strategy byline of ‘Navigate your Next’, because what we want to be for our clients is to be a partner with them for the long term, not just for this current cycle of digital transformation.”
“‘Navigate’ because in many of these situations the client already knows that they need to disrupt themselves and they are looking for help because they don’t sometimes understand technology, or don’t know how to apply technology or to morph from the old to the new technology, and that is where the navigating role comes in for companies like Infosys or Stater. Obviously, in the last four months the world has changed due to COVID-19 and the economic fallout. Yet in our conversations with clients, it’s never been clearer that the answer for businesses to become resilient lies in technology. We see an acceleration of how our clients want to use technology to disrupt themselves in some ways. They already got disrupted because of the economic situation and the lockdowns and everything else, and this is a great opportunity to leapfrog. So of course there are immediate challenges in terms of uncertainty, but in the longer term technology has a role to play for all our clients.”
Could you describe Infosys’ “five axes of digital outcomes” and how this approach resonates with what your clients are looking for?
“Everyone talks about digital and has a different definition of digital. When our clients talked about digital transformation, it was important for us to create some sort of framework in which we think and discuss this transformation from their perspective. So, our five axes of digital outcomes are about:
1. Experience - Are our clients able to leverage technology to create a differentiated customer experience for their end customers – both internal and external customers?
2. Insight - Are they then able to use technology to obtain better insights from the vast amounts of data they are collecting?
3. Innovate - Are they then able to leverage those insights to create new and innovative products and offerings in iterative and short time frames?
4. Accelerate - Are they able to improve their return on technology by integrating systems, modernising them and leveraging new infrastructure, such as the cloud?
5. Assure - Are they able to ascertain and assure themselves that their technology is delivering the actual business results in a secure and compliant manner?
“If clients want to claim success in digital transformation, then their business should have gone through all of these stages.”
What does the strategy of Infosys look like?
“We’re going through a challenging time, not just for our industry but for all industries and many of them are in dire need of solutions and services to help them out of this. Strategically, we have four pillars in our strategy. The first one is to scale our agile and digital capabilities and this is because most of our clients are moving towards agile and digital. This is going to accelerate in the coming months and years so we will continue to build our capabilities and offerings around agile and digital in line with the five elements of our digital pentagon.”
“The second pillar is ‘energising the core’, which means what do you do with the services that you perform on traditional old legacy landscapes. Here again we feel that there are several opportunities for our clients to take out costs. This could come in the form consolidating their vendors, to people having more resilience in the current situation, taking costs out of datacenters and IT systems, automation and also situations where bold decisions are made about transformation and taking the computer landscape to the cloud, for instance, or to third-party systems. All of this is part of what we have been focusing on in ‘energising the core’ and this is what we have been doing for ourselves as well: there is a very strong focus within Infosys on how we energise ourselves, our sales team, our productivity, create more agility within the corporation, and so on.”
“The third pillar of our strategy has been about reskilling our employees. As a knowledge-based industry, our employees are our main asset and we have to make sure this asset is refreshed to be able to handle new capabilities. Over the last couple of years, we have made a very focused attempt at getting all employees to be reskilled on new technologies, new paradigms, new methodologies like agile, and so on, and that effort will continue. And we’re spending a lot on platforms in this space. It’s not about learning in classrooms anymore, it’s about learning in small pieces, learning online at your own pace. This is something we have invested in, and have created a fantastic platform for. We have a lot of interest from our clients to use it as well. Because they are going through exactly the same problem and they’d like to use our platform to see how they can make learning fun and meaningful for their employees.”
“And the last pillar of our strategy is about localisation and again the current crisis across the world has created a lot of unemployment. Many governments are thinking about protectionist measures, thinking of their people and interests first, and in this situation some of the assumptions we have made in our strategy, such as money, people, knowledge, data, travelling freely across the world are being challenged. The world is going through a sort of globalisation crisis at the moment. So we had to rethink this risk. We have therefore made a concerted effort to recruit locally in the geographies that we operate in. For instance in the USA, which is one of our biggest markets, we recruited more than 10,000 people and similarly we opened offices in Dusseldorf in Germany and in the UK and Australia. Of course the Benelux region has always been a strong region for Infosys and our acquisition of Stater in fact fitted very well with how we can create a local workforce in the Netherlands. So I think this one is a key important initiative for Infosys and we continue to invest in that by building organically and also inorganically. These are the four pillars of our strategy.”
Could you share your observations on Stater’s strong BPO proposition and the European mortgage services market?
“The transaction to acquire Stater was based on a few important principles. The first is as we look at our BPO services, Infosys always looks at how we can move the needle. Today, vanilla transaction processing has become much more mainstream and commoditised and our focus has been on how we can move these transactions into platforms that improve the client value delivered. Stater is a perfect fit with its modern platform-based BPO offering and essentially gives our clients a clear headstart and having mortgage services ‘out of the box’ is a clear offering that they can leverage. This is an important element as to why Stater fitted into the overall Infosys strategy. Secondly, we have a long-standing relationship with ABN AMRO Bank and this was a great opportunity to strengthen that relationship. Thirdly, we feel there is a lot of synergy - while Stater traditionally had looked at the Netherlands and the Belgium market we now feel with the strength of Infosys behind it, Stater can have a broader reach into European market, so the combination is more powerful than the individual parts. Stater brings the expertise of automation in mortgage servicing and how local regulations work; Infosys brings client access and technology based services expertise and together we have a very compelling proposition for the European markets.”