Business, Investments

Infosys CEO Vishal Sikka to Finally Use its USD 100M Startup Fund

In order to transform the outsourcing services company into a leading software maker,Infosys chief executive Vishal Sikka wants to put to use the USD 100 million startup fund approved by the company many months ago, as per an Economic Times report. In April last year, Infosys announced a USD 100 million fund to invest in products platforms and solutions.

“I want to put that to use starting tomorrow,” said Sikka. “I see us as a great amplifier. Once a startup raises Venture Capital, their primary problems is around achieving scale quickly.”


Also Read: Infosys Director invests in wearable device maker, GetActive

In the coming days, the company is expected to work with startups and venture capitalists and also wants to encourage employees to come up with new ideas. “Our engineers are excited about this idea because they want to work with what is happening in the startup world here and in the valley,” said Sikka, who was a product visionary at Germany headquartered SAP until recently.

WSJ says: Here are some edited excerpts from the interview.

Wall Street Journal: As you take over what are some of the things you want to change at Infosys?

Vishal Sikka: Right now, we are not planning to bring in any change to the aspirations that we have laid out to the markets. We believe we can do a lot more around intellectual property, reuse of software and achieve economies of scale.

WSJ: By focusing on developing your own software are you shifting in the direction of an Oracle or SAP?

Mr. Sikka: I’m looking to put in place a way to get Infosys to enter new areas where software is making its way for the first time–whether it is through building new industry-oriented software applications or developing software with partners or working with startups.

WSJ: What is your vision for Infosys?

Mr. Sikka: My vision is to turn Infosys into the bellwether of India’s outsourcing industry. We would like to be the defining IT services company in the world providing innovative solutions.

WSJ: What is your roadmap to address some of Infosys’ operational challenges such as the slow pace of growth and high rate of staff attrition?

Mr. Sikka: I don’t have a roadmap on that. But I have great confidence in the leadership team. The founders have done a lot of work around improving the company’s operating margins, trimming costs and reducing overheads in the last 12 months.

You have to also give us some room because the services business takes some time to show results. I don’t want to create an expectation that all of a sudden things will get dramatically better.

WSJ: How are you planning to work closely with startups?

Mr. Sikka: We are going to create a $100 million venture fund. We have already got shareholders’ approval for that a couple of quarters ago. But it is sitting there. I’m very keen to get moving on that.

This fund will help us get connected to the innovations from startups around the world. I want to incubate companies internally as well as externally.

WSJ: How do you allay investors’ concerns about a turnaround at Infosys?

Mr. Sikka: The turnaround takes two shapes: the improvement in the fundamentals of the existing business which we will continue to do and supporting that with new businesses. The combination of these two will give us long-term growth.

WSJ: Do you think Infosys should deploy the $5 billion it has in cash for acquisitions?

Mr. Sikka: The fiscal soundness of the founders is exemplary. We see a tremendous opportunity to do acquisitions in areas that make sense to us such as acquiring great skills and expertise in the market in new areas. It is good to have a rich cash pool. We have no reason to change the principles the founders have had.

WSJ: Is the sharp rise in employee attrition a big worry?

Mr. Sikka: Our attrition rates have been much higher than the industry average and that is obviously worrisome. The biggest factor to keep talent is growth. Once people see that things are moving in the right direction a lot of these things will take care of themselves.

WSJ: As you plan to use more technology will you be hiring fewer people?

Mr. Sikka: My idea is that you still need a combination of people and automation to work on problems. I don’t see a slowdown in hiring as a result of automation. We will continue to hire from the best schools for the skills that we need.

More from Economic TimesInfosys rival Wipro has also set up a venture capital arm. As ET had reported earlier, Wipro Chairman Azim Premji’s son Rishad Premji will oversee the $100 mn fund. It will invest in areas such as data analytics and machine learning. 

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