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The raison dtre of every corporate body is to ensure Predictability, Sustainability, and Profitability of revenues year after year," Infosys co-founder and chief mentor NR Narayana Murthy has been quoted as saying in the investor page of Infosys website.

That is a promise Infosys has stood by. Strict adherence to this principlewhat it internally calls PSPD (the D is for derisking)has paid off immensely for Infosys in terms of investor confidence. Today, it is the most valuable (pure play) IT services company in the world.

But there is one area of its business where Infosys has not been able to apply the PSPD principle: consulting. The consulting business of Infosys is today led by a subsidiary company, Texas, USA-based Infosys Consulting, Inc. Started in 2004, with a couple of ex-Deloitte consultants at the helm, the idea behind the company was to build a high value service line that would increase revenue per employee, and at the same time build deeper client relationships at the boardroom level. It was argued that unlike IT business where long-term contracts rule and, hence, accurate revenue forecasting is possible, consulting contracts are high-value, high-impact engagements with shorter cycles. Predictability is not possible the way it is in the IT business. Infosys top brass agreed.

In 2002, Infosys had got into the other end of the services spectrum by starting a BPO company, Progeon, with 20% equity participation from Citigroup. Unlike consulting, growth potential was the driver behind the decision to get into BPO. But despite a separate branding, an outsider CEO, and very different employee intake, Progeon was built with an Infosys DNA, measuring operational metrics the same way as the parent (though their values looked quite different). Moreover, it was situated right at the Infosys campus in the Electronics City.

How the two subsidiaries have evolved tells much about Infosys as a group.

Strictly speaking, Infosys is not a diverse group. It is one company, with a few wholly owned subsidiaries. But analyzing its performance as a group is important because as it gets into new areas by a mix of organic and inorganic means, how it handles the governance as well as relationships with different subsidiaries will become extremely important.

FY 07 saw the culmination of Infosys BPOs gradual integration process with the parent. Soon after it started Progeon, Infosys realized that BPO was a long-term game and held tremendous opportunity if it could be effectively integrated with its core IT services. So, going against the rules of the then call-center-dominated BPO marketplace, Infosys started integrating it with its IT business: platformizing skills; pursuing transformational deals with significant IT components; and above all, adding BPO to its One Infy offering (where one client lead was responsible for selling different services to a customer). In 2005-06, it bought Citis stakes to further integrate it and, last year, it changed the units name from Progeon to Infosys BPO. The business grew 75% last year to cross Rs 650 crore4.7% of Infosys overall revenue from 0.5% in 2003

Infosys had identified BPO, along with testing, package implementation, and consulting as the growth areas four years back. Though testing and package implementation do not match BPOs growth, they too have grown impressively.

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