Infeeee, Infy; Infeeee Infy

Is this right time to invest in Infosys ? Can Infosys gain its past glory ? Many have these question in mind. This is a classic dilemma whether to buy a transformation at a reasonable valuation or to buy a well oiled company at a premium valuation.

Now let us examine few points here. Indian IT services is primarily a labour arbitrage. In very few cases we can find a company which is in innovation like a google or primarily a product company like SAP or primarily a consulting. Now indian IT companies have sustained their business models on back of labour arbitrage till now. They had first mover advantage but over the period even global giants like IBM have added a huge headcount in India, hence cost advantage of Indian IT companies is no more available. 

At this juncture has the time come to revisit the indian IT companies business model ? Yes in my view. It has been widely recognised. Even infosys version 3.0 has some detail on this. They had acquired a consulting company and has got higher proportion of consulting revenues but have they embarked a journey on innovation or products ? Not so much.

At this backdrop Mr. Vishal Sikka who is known for his role in resurrecting SAP for his domain expertise and thinking ahead of others has Infosys has thought ahead of Indian peer group ? I think so. 


But what is reality is a company which was pioneer in IT outsourcing in India, which lost its way in last few years due to some tactical / strategic errors in the last few years led to lower growth and margin squeeze available at inferior valution multiples. This company is trying to script a second journey for Indian IT industry and the founder member team handed over baton to professional management.I would bet on this turnaround!