Infosys Ltd. (INFY) recently declared intentions to restructure its organizational structure, which will be effective from Apr 1, this year. Following the announcement, the company’s share price edged up 0.06% during the trading session on Feb 6.
This strategic initiative is in sync with Infosys’ long-term goal of providing breakthrough solutions for clients by coupling tactical insights with flawless execution. In particular, the move is aimed at strengthening the company’s position in the market, fostering innovation and promoting effective differentiation across service lines.
The Fresh Structure
The latest scheme of structural reorganization aims to unravel the manner in which the company’s diverse layers utilize technology, and this knowledge will help deliver better services. Per the plan, Infosys will be organized into three key areas – sales, delivery and business enabling functions.
Under the new strategy, sales will be structured across five global industrial segments, namely, financial services; energy, utilities, communications and services; manufacturing; life sciences, healthcare and insurance and retail, CPG and logistics.
On the other hand, Delivery will be organized across the seven service lines, namely, application development & maintenance, independent validation & testing, management consulting services, digital integration services, engineering services, enterprise package application services and cloud & infrastructure services.
Our Take
We believe the realignment initiative on Infosys’ part will enhance flexibility within the organization which will drive superior operational performance. This, in turn, will generate huge cost-savings for the company translating into improved financial credentials in the long run.
As a matter of fact, Infosys has consistently surpassed expectations recently. In Jan, the company declared strong third-quarter fiscal 2015 results, with earnings per ADS (American Depositary Share) from continuing operations of 46 cents, beating the Zacks Consensus Estimate by 7% and the year-ago earnings by 12.2% (read more: Infosys Beats on Q3 Earnings, Affirms Revenue Guidance).
Infosys currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Kofax Ltd. (KFX), Fair Isaac Corp. (FICO) and CoStar Group Inc. (CSGP). While both Kofax and Fair Isaac sport a Zacks Rank #1 (Strong Buy), CoStar Group holds a Zacks Rank #2 (Buy).
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