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Infosys is seeing an uptick in demand from government, healthcare, and food and beverage sectors that have been steadily investing in cloud-based platforms even during the covid crisis. (Reuters)
Infosys is seeing an uptick in demand from government, healthcare, and food and beverage sectors that have been steadily investing in cloud-based platforms even during the covid crisis. (Reuters)

Infosys doubles down on investment in cloud as demand surges post pandemic

  • Infosys entered into a definitive agreement to acquire Europe-based GuideVision for up to €30 million to augment its Cobalt portfolio of cloud services and to further strengthen near-shore delivery presence in the European region

Bengaluru: Infosys Ltd is doubling down on investment in its cloud business as it witnesses a surge in demand, with clients opting for remote working solutions, new business models, and business continuity plans in the post-pandemic era, a top executive said.

On Monday, Infosys entered into a definitive agreement to acquire Europe-based GuideVision for up to €30 million to augment its Cobalt portfolio of cloud services and to further strengthen near-shore delivery presence in the European region.

“Cloud has been gaining ground in the last 2-3 years as it helps bring agility to business and reduce costs, but the pandemic has further accelerated the demand," Narsimha Rao Mannepalli, executive vice-president and head of cloud and infrastructure solutions, Infosys, said in an interview.

Infosys is seeing an uptick in demand from government, healthcare, and food and beverage sectors that have been steadily investing in cloud-based platforms even during the covid crisis. Education, consumer packaged goods, travel and hospitality, automotive, and energy and utilities are among sectors that have shown subdued demand as they have been severely hit.

While Infosys does not share its cloud revenues separately, it is clubbed under its digital revenues which grew 25.5% in constant currency terms to $1.38 billion and contributed 44.5% to the total revenues for the first quarter ended June.

“The cloud opportunity is for real and large IT services companies have done a lot in terms of innovation in their products, platforms and services. And, this opportunity has further accentuated as a result of the pandemic, and companies are aspiring to rapidly grow their cloud-related revenues to about 40-50% of their overall digital business," said Nitin Bhat, technology sector leader, EY India.

Infosys has been building its cloud capabilities, both organically and inorganically, over the last few years. Last month, it launched Cobalt, a set of services, solutions, and platforms to help its clients build cloud-first capabilities —one of its biggest organic investments in recent times.

“This is perhaps for the first time we are building a brand for a service offering. We want to brand it so that clients can understand the differentiation and work with us," said Mannepalli.

Infosys had acquired Fluido in 2018 and Simplus in 2020—both Salesforce partners in cloud consulting and implementation—to expand its enterprise cloud capabilities.

“We have made acquisitions in the past and we will continue to look for those opportunities all the time… but inorganic growth is not just about acquisitions," Mannepalli said. “Inorganic growth can come through partnerships so that we are able to take their ideas and tools and bundle it into our service offerings."

Infosys has partnerships with established cloud players like Amazon Web Services (AWS), Microsoft Azure, Google Cloud, HP, and Dell. It is also working with the startup ecosystem and academic institutes to tap into cutting-edge products and innovation that can be bundled into its offerings.

At a time when traditional service offerings like application development and maintenance (ADM) and infrastructure services are seeing huge pricing pressure, cloud business is better off. “Price is a function of demand and supply and there is a shortage of talent in cloud and digital. So to that extent, there is really not much clients can do on putting the prices down in a random manner," said Mannepalli.

Instead, clients are insisting on outcome-based delivery models where speed-to-market is accelerated and they can get benefits faster. “In some cases they are looking for shared IP (intellectual property) development or ways to partner for the long run," he added.

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