Infosys looking at three pronged strategy to work with start-ups: Pravin Rao
Infosys chief operating officer Pravin Rao says collaborating with start-ups goes beyond mere investing
Mumbai: For Infosys Ltd, India’s second largest information technology services firm, collaborating with start-ups goes beyond making only direct equity investments, says chief operating officer Pravin Rao.
India’s second largest IT services firm is looking at a three pronged strategy to collaborate with start-ups, he said.
“Apart from making direct investments, we are working with start-ups to help them in scaling their offerings," Rao said on the sidelines of the 24th Nasscom India Leadership Forum in Mumbai on Thursday
“Sometimes, even though start-ups have the talent and an innovative product or idea, they find it difficult to scale up. We can provide and help them in their engineering," he said.
Additionally, Infosys is also trying to help startups grow by taking them to customers. “We are bundling their offerings into our services and take them to customers. They have good ideas and products but they don’t have the customer reach," said Rao.
However, he added that these are all early days and the IT giant is working on understanding how it can integrate these offerings.
“It’s been around three to six months that we have started, so currently we are in the process of understanding their technology better and gradually we will take them to the client. But that is the intent," he said.
On the investment side, the firm is looking at making investments in new technologies in the areas of automation, digital, design, big data and analytics.
“We have invested in AirWiz, a company which has developed technology that measures air quality. This has several applications in industries such as automobiles, mining and so on. We also invested in another company called Whoop, which makes wearable devices for professional athletes. The device measures various parameters and analyses the circumstances under which those parameters result in good performance, which can help athletes during training," said Rao.
Infosys invested $2 million in AirWiz in April last year. In December, the firm invested $3 million in Whoop. Some of the other startups in which Infosys has invested include disaster recovery software firm Cloud Endure and corporate consultancy firm ANSR Consulting, which operates the Kryon start-up accelerator in Bengaluru.
Most of the Infosys founders including N.R. Narayana Murthy, T.V. Mohandas Pai, Nandan Nilekani and Kris Gopalakrisnan have been investing in start-ups in their personal capacity for a couple of years now. But the push to make start-ups an integral part of the Infosys strategy began only after Vishal Sikka took over as CEO in August 2014.
According to Rao, collaborating with start-ups is an integral part of Infosys’s strategy.
“Our belief is that you can’t have a separate department or unit to drive innovation, that the entire organization has to have innovative thinking," he said, adding that by bundling offerings from start-ups with its services, the firm is integrating them with the mainstream.
To support the start-up environment in India and globally, Infosys has set up a $500 million fund. The company will invest $250 million in Indian start-ups through the Innovate in India Fund.
“We have invested in about six-seven start-ups so far. We are minority investors with 5-10% stake and we don’t go beyond that. Since we have a large amount of resources to spare from the fund, we have enough headroom to continue with our focus on startups," said Rao.
Infosys is not the only major Indian IT services business that is investing in start-ups. Rivals Wipro Ltd and Tech Mahindra Ltd have also been investing in start-ups. In 2012, Tech Mahindra set up a $50 million joint investment fund in association with SBI Holdings, a Japanese venture capital firm, while in 2014, Wipro announced that it is setting up a $100 million fund to invest in start-ups.
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