BENGALURU: In a first,
Infosys is including the company’s performance in digital revenue as a performance metric against which its top executives' performance will be measured.
Digital is the umbrella term that covers progress in
cloud, analytics,
internet of things (IoT) and machine learning. These digital offerings have altered the entire service delivery landscape significantly.
For Ravi Kumar, president, the metrics also includes fulfillment of the US talent model and meeting the financial plan of consulting. For Mohit Joshi, president, the metrics also includes revenue & margin for industry segments and sales effectiveness.
Jimit Arora, who leads US-based advisory Everest Group’s IT services research practice, said the inclusion of digital is a new development for the industry and for Infosys. “Vishal Sikka was intellectually offended by the concept of digital revenues (he believed everything is digital) and that in some ways put the company at odds with how competitors and investors were tracking progress on digital services. We also believe that this put the company behind the curve on the digital mandate in the industry,” he said.
For Infosys, digital revenues grew 8% sequentially in the last quarter to $803 million. That's 28.4% of total revenues. But this pales against Accenture’s 60% from digital services.
CEO
Salil Parekh's performance metrics include revenue growth, operating margin and organisation development goals. Vijay Govindarajan, Coxe Distinguished Professor at Tuck at Dartmouth, said the number one CEO agenda for industrial incumbents such as Ford, Deere,
Walmart, and GE are to becoming relevant in the face of digital technologies.
“This calls for a fundamental transformation for the Indian IT industry, from helping Fortune 500 companies digitise their current business model to helping clients innovate digitally-enabled new business models. This shift is easier said than done. By linking executive compensation to revenues from digital business models, Infosys has taken the right step to secure its future”.
Arora said one of the important changes as part of the new strategy under Parekh was to accept that digital is an important business trend and growth in digital will be an important measure of success for the company. “Consequently, measuring growth in digital as a component of executive compensation is a good way to ensure alignment with shareholder objectives in a digital-first world, and ensure progress of the company as the traditional arbitrage-centric model faces pressures,” he said.
