Infosys Focuses On Product Development, Creates A New Subsidiary: Edgeverve Systems
IT Businesses can be categorized into two broad headers: Services and Products. India has been a shining example of how ‘services’ can be optimally delivered, thereby creating gigantic companies like Infosys, TCS, Wipro & others who have perfected the art of providing services to overseas clients.
While “Services” model can work well, it can only take you far that much; The real pay-off comes from product development (if it goes to become a success), and Infosys knows that.
In order to solidify their position in the products market, Infosys have carved out a new subsidiary: Edgeverve Systems which will solely focus on the creation and distribution of products and platforms.
Infosys said in a US SEC filing, “On February 14, 2014, we incorporated a wholly-owned subsidiary, Edgeverve Systems Ltd and invested less than USD 1 million in the subsidiary. Edgeverve is expected to focus on developing and selling products and platforms. On April 15, 2014, the Board of Directors of Infosys has authorised the company to execute a Business Transfer Agreement and related documents with Edgeverve, subject to securing the requisite approval from shareholders in the ensuing Annual General Meeting scheduled on June 14, 2014”
Previously, the division which created software products in Infosys was known as Product, Platform and Services (PPS), which was headed by Sanjay Purohit. They have been debating since long whether to create a separate unit for PPS as they only managed to contribute 3.6% ($297 million) of the total revenue ($8.25 billion) generated by the company in 2014. Finally, they have done it.
On revenues generated by the PPS division, Infosys said, “We also generate revenue from software application products, including banking software. Such software products represented 3.6 per cent, 4 per cent and 4.6 per cent of our total revenues for fiscal 2014, 2013 and 2012, respectively.”
The newly created subsidiary: Edgeverve Systems would be headed by Sanjay Purohit and Samson David would be the COO.
Interestingly, Finacle, which is the most successful product ever created by Infosys would be retained with Infosys and would not be part of the new subsidiary. Finacle is a core banking software being used by several nationalized banks including Punjab National Bank among others. Out of 3.6% revenue generated by PPS for Infosys, major contribution used to come from Finacle itself. But as it won’t be part of Edgeverve Systems, this new subsidiary would start from scratch.
In the year 2011, Infosys had declared a vision for 2020 called Infosys 3.0, according to which, PPS division should be able to generate 33% of the total revenue generated for the company. But with 3.6% revenues in 2013, it seems a long way to go.
Edgeverve Systems will have a lot to deliver in the coming years.