Infosys, Wipro increase focus on verticals to overcome growth challenges

Restructuring is disruptive and takes away operational focus," says Kris Gopalakrishnan , CEO of Infosys Technologies , after a week of tumult that saw new and old questions being raised on the company's ability to stay ahead and settle leadership issues. So, if the software-services company is in the midst of its first organisational overhaul in four years, it must have very good reasons. There are.

The first is TCS, the only Indian software company running ahead of Infosys, and running further and further away from it with each passing quarter. The second is Cognizant, one of two companies behind it, and getting bigger and bigger in its mirrors. Gopalakrishnan sidesteps that bait, but senior Infoscians say those two peers provide a context for many internal conversations about growth.

In a sense, the restructuring journey that Infosys has embarked on is one that TCS and Cognizant started a few years ago. The basic premise was how best to compete in the market while keeping their huge employee base engaged. Every Indian software company, while doing business, has to deal with three dimensions-geographies, industries and service lines. And this is where the lines tend to cross-and affect business.

While Infosys kept things centralised and gave importance to all three fronts, TCS and Cognizant regrouped along industry lines, or verticals. TCS, for example, planned to create 23 business divisions, each with a CEO having a high degree of autonomy. Mini-corporations within a large corporation.

For the last seven to eight years, Infosys has been gradually increasing its focus on verticals. It's now taking it to its natural conclusion. "We are now applying this (verticalisation) to the entire company," says Gopalakrishnan. It's a line of thinking that its cross-town rival from Bangalore, Wipro, also embraced in January 2011, after a similar bout of disappointments on the business front threw a poser on how it was doing business.

Partha Iyengar, head of Gartner's India research, says the companies are responding to deeper market changes, but the transition to a more decentralised structure could be painful. "Not everyone is starting from the same point," he says. "I don't look at it as verticalisation, but as an effort to make the organisation more agile and responsive," says Sudin Apte, founder of outsourcing advisory firm Offshore Insights.

'One Wipro'

TK Kurien , new CEO of Wipro, likes to use a moniker to summarise what the software services company wants to transform itself into: One Wipro. It is meant to describe a physical state of being where the sprawling parts of its business are organised to run in the same direction, without crossing paths.

In the old structure, before January 2011, they didn't always. Take the way Wipro did business with a bank like Citibank. Three separate departments in Wipro-banking, sales and software testing-had mandates to sell business to the bank directly.

So, at any point in time, three different teams from Wipro would be making pitches at Citibank. Its banking vertical would be selling a banking software, the sales team might be making a pitching for the bank's back-office work, and its software testing division would be offerings its testing services.