Wednesday, April 25, 2012

Revisiting INFY's growth again …


One of my favorite things to do is to revisit Infosys' growth trajectory once every 2-3 years :).  Don't ask me why, but having seen how Infy operates during my stint at Pramati I always felt that Infy's HR driven model will hit a ceiling at some time or the other.

My first look at Infy's prospects goes back to January 2007.  My argument was that Infy seems to only grow by adding more professionals to its workforce and at some point it will have to break up its businesses.

My second look was in October 2008 and I have updated my table after 3.5 years :


                  Year            revenues          employees                       profits
1998 0.771 0.445 0.52
1999 0.674 0.43 2.47
2000 1.003 0.824 0.987
2001 0.314 0.092 0.604
2002 0.413 0.434 0.398
2003 0.409 0.668 0.597
2004 0.498 0.431 0.213
2005 0.351 0.432 0.46
2006 0.425 0.339 0.383
2007 0.19 0.228 0.174
2008 0.201 0.262 0.165
2009 0.300 0.150 0.351
2010 0.048 0.085 0.056
2011 0.209 0.150 0.169


As of 2011, Infosys has over 140,000 employees and makes about 45,000 USD in revenue per employee and about 20,000 USD in profits per employee.  The profits number has been stagnant for over 4 years now while its revenues per employee number has grown by about 10%.  So, Infosys makes more per employee but due to the rising salaries in India, it has not been able to improve its bottom line.

For a company that continues to add about 10-12% to its workforce every year to make the same profits, this should be a time to reorganize.


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