Infosys Labs ceases to be independent entity

Functions of the three R&D units that were housed in Infosys Labs have been merged with the firm’s delivery side


The change mirrors the structure at product-focused tech firms such as SAP, Infosys CEO Vishal Sikka’s ex-employer. Photo: Aniruddha Chowdhury/Mint
The change mirrors the structure at product-focused tech firms such as SAP, Infosys CEO Vishal Sikka’s ex-employer. Photo: Aniruddha Chowdhury/Mint

Bengaluru: Infosys Labs, which houses three units comprising the research and development (R&D) division of Infosys Ltd, has ceased to be an independent entity with its functions being merged with the company’s delivery side, two company executives familiar with the development said.

This is the first major organizational change at the country’s second largest software exporter since Vishal Sikka took over as its first non-founder chief executive officer (CEO) in August last year.

The platform arm of Infosys Labs, comprising nearly 300 executives, will report to Abdul Razack, the former SAP executive tasked by Sikka to steer the company’s platforms and big data practice.

The 200-strong Centre of Excellence (CoE) under Infosys Labs will report to S. Ravi Kumar, mandated to overlook most delivery-side functions. Savio D’Souza, who until now headed CoE, will report to Ravi Kumar.

The third and the last arm, IP cell, headed by Anindya Sircar, will work with the company’s legal cell, the executives mentioned earlier said.

“These changes are being implemented because we realize we (Infosys Labs) cannot work in a silo and the research undertaken should address real-world solutions,” said an executive privy to the developments. “Under this change, we can unlock value from Infosys Labs and help our clients in addressing their problems.” All these changes are effective 1 April. A spokeswoman for Infosys confirmed the overhaul. “This is being done to enhance the synergy between the work being done at the various centers of excellence and the offerings that we are taking to our clients,” she said. Some experts said the change mirrors the structure at product-focused technology firms such as German software leader SAP SE, Sikka’s former employer.

“This organizational structure is more akin to a product organization,” said Ray Wang, founder of Constellation Research. “It means that Infosys is serious about building IP (intellectual property), productizing delivery, and potentially building reusable platforms that customers can co-create and co-innovate. I believe it is very important these entities be embedded into the delivery side.”

The revamp means Infosys Labs—which was formed as Software Engineering and Technology Labs in 1999—will cease to exist as an independent entity. The R&D arm worked on developing proprietary technologies, including in areas of data visualization and augmented reality, and partnered with institutions such as University of Illinois and the Indian Institute of Technology Bombay.

Over the last few years, Infosys Labs has been fighting “an existential crisis” after its workforce was cut by up to 20% last year, by N.R. Narayana Murthy, who returned in 2013 to steer the company he co-founded. The staff cut led to the exit of its boss Subrahmanyam Goparaju in December 2013.

“The announcement to align R&D directly with delivery units is strategically sound,” said Thomas Reuner, principal IT analyst at Ovum, a London-based research firm. “The biggest advantage could be a faster time to market. But as so often, the proof will be in the pudding: Will Infosys be able to drive through the necessary change management and create a new customer-centric culture.”

A former senior executive of Infosys Labs, who quit in 2013, wondered if the restructuring would help. “We were perceived to be just working in our own space. And so, we were asked to significantly cut down on our manpower. I doubt if this revamp will be helpful. The problem is that you are not hiring good quality people. Till the time you hire people, with more PhDs (doctorates), how can you offer solutions, file patents?” the executive said on condition of anonymity.

However, Wang of Constellation Research said restructuring is something that global outsourcers including IBM Corp. and Accenture Plc, have already done where R&D arms are built into each of the service lines. “This is the fastest way to accelerate the productization of IP from the field and to ensure the ability to improve profit per employee,” he added.

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