July 18, 2016

The Infosys turnaround: hype or reality?

The highly disappointing first-quarter earnings of Infosys Ltd have raised questions about claims of a turnaround under way at the company. I continue to be amused, though, at the alacrity with which sell-side analysts and excitable TV anchors/commentators rush to conclusions and create demigods out of mere mortals when the complexity of a turnaround in an increasingly complex international environment is still to be fully played out. This complex question needs to be analysed under three heads.

Firstly, an understanding of what constitutes a successful turnaround. The three phases are: fixing the structural issues (revenue, costs and organization), turning around the morale of employees and investors, and finally successfully implementing the new business model through acquisition of new revenue streams. Infosys chief executive Vishal Sikka can be credited with achieving the first two. It must be remembered, though, that when one inherits a humongous cash reserve of a few billion dollars, it is relatively easy to...

Read more at http://www.livemint.com/Opinion/psyxoJt9ZNIe0d9dhccnyK/The-Infosys-turnaround-hype-or-reality.html

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