Infosys generated between 14-20 contract leads at Mobile World Congress

Infosys' robotic display at MWC2023.

Barcelona: Anand Swaminathan saw a client walking by the Infosys stand at the Mobile World Congress, held in Barcelona this week (27 Feb to 2 Mar), and invited her in for a cup of tea and to rest her legs, tired from walking around the expansive venue.

Little did Swaminathan know then that observing the miniature robotic exhibit Infosys had set up to showcase its private 5G solution would trigger a new business conversation. Swaminathan is executive vice president, and global industry leader for the communications, media and technology group at Infosys, the Bengaluru-based information technology services company.

The visitor, the chief investment officer of an Infosys client, went on to express an urgency to move on the company's telecom deployment. So the conversation quickly transitioned to exploring how the partnership with Infosys would generate $100 million revenue for the client over two years.
“That she was willing to review,” said Swaminathan, who hopes to close the deal quickly on the heels of this conversation.

“Generally the perception is limited to what we do for (clients). There is not enough time in regular discussions to expand beyond the normal course of business. So when they come here (MWC), that's when some magic happens.”

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Generating contract leads

Casual conversations with a host of customers have led to 14 to 20 business leads that mean “we are looking at hundreds of millions” worth of contracts. This cements the presence of Infosys at the conference in upcoming years, said Swaminathan.

When it comes to telecom investment, Swaminathan believes that “5G can potentially be the last G” for telecom operators that have over the years struggled to achieve returns on high capital expenditure on optical-fibre laying, and technology evolutions such as 3G, Long-Term Evolution and now 5G. Here on, he believes models will evolve for enterprises in other verticals to subsidise the cost of infrastructure.

The softness in the global economy is accelerating a transition towards service contracts which involve Infosys contributing towards the initial capital spending and charging the clients over a longer period on a cost per invoice or cost per employee basis, said Swaminathan. “That conversation has been happening for a long time. We have contracts like that. Now it's accelerating even more with the economy.”

For Infosys, this means low returns at the start but longer tenure commitments from clients.

Telecom vertical

The telecom vertical doubled in four years and despite softness in the market is growing even faster at the moment, Swaminathan said. Efficiencies from Artificial Intelligence (AI) tools will help Infosys shorten the time to delivering services using fewer resources.

That said, generative artificial intelligence solutions, like ChatGPT, will not immediately make programmers irrelevant. Instead, “when you have a developer, you almost have an avatar sitting next to him that is going to help him in the process,” said Swaminathan.

Generative AI is being tested globally to autogenerate code, and is arguably poised to take over functions performed by bottom of the pyramid coders. “Will it be a threat? Yes, if we don't imagine a world in which we can solve higher order problems,” explains Swaminathan.

It is for this reason that Infosys has a centre of excellence, with a team of over 100 dedicated to exploring and teaching an internal AI engine to alleviate the mundane, repetitive work of Infosys’ programmers.

In the long run, this will lower the volume of fresh talent the company hires every year. “Overall recruitment numbers are going to be lesser for sure, but I think, the sector will still have net additions,” Swaminathan said.

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Impact of economic uncertainty

The current economic uncertainty is hurting clients and therefore puts Infosys in a bit of a bind too when it comes to pressures on pricing and value proposition, but the company is looking to partner and share clients’ pain now in preparation for a cyclical turn.

“This is a time when there is a transition going on, and nobody knows how far how long is the softness going to exist. It means operationally, you have to be more intense on the game. So what took two approvals before is now taking four approvals on the client side.” The need of the hour is to count each dollar.

The semiconductor industry, he said, is continuing to struggle in the supply chain, and clients are delaying investments in expanding production capacity that were announced over the last two years.

“As surreal as it might sound, there's still component shortages.” The post-pandemic slowdown in personal computer and device sales is hurting revenue prospects of clients. “Definitely the orders are slowing down a bit for them.”

Telecom companies are reeling from high capital expenditure without significant change in average monthly revenue per user, he said.
Performance in the entertainment industry is divided.

The physical clients, such as theme parks, are now seeing a return to pre-pandemic-level performance, but investment, and development of over the top content, usable digitally, is being withdrawn “because this is not a market where you can go after growth at any cost, because interest rates have gone up. So therefore, there is an impact,” Swaminathan said.

“So on media and entertainment for Infosys there will be some slowdown.”
On an overall basis Infosys remains optimistic about long-term growth with customers, even though the end of economic uncertainty across the globe is a moving target at the moment.