The products, platform and solutions-PPS business of Infosys has not performed as expected, except its Finacle core banking unit. This may have prompted Infosys to hive off PPS business to its unit Edgeverve Systems
Infosys Ltd on Monday hived off its products and platform business into its subsidiary Edgeverve Systems Ltd mainly due to lower revenues from the software products segment.
Edgeverve, the subsidiary of Infosys was set up in February 2014 to focus on developing products and platforms.
“On 14 February 14, 2014, we incorporated a wholly-owned subsidiary, Edgeverve Systems Ltd and invested less than $1 million in the subsidiary. Edgeverve is expected to focus on developing and selling products and platforms,” Infosys said in a regulatory filing in the US.
“On 15 April 2014, the board of directors of Infosys has authorised the company to execute a Business Transfer Agreement and related documents with Edgeverve, subject to securing the requisite approval from shareholders in the ensuing annual general meeting scheduled on 14 June 2014, ” the filing added.
Set up in 2011 as part of the Infosys 3.0 strategy, the company was aiming to get at least one-third of its revenues from intellectual property-based software products, platforms and solutions (PPS) by 2020.
However, analysts feel the PPS unit has not performed as expected with the exception of Finacle core banking unit.
On revenues from software products, Infosys said: “We also generate revenue from software application products, including banking software. Such software products represented 3.6%, 4% and 4.6% of our total revenues for fiscal 2014, 2013 and 2012, respectively.”
The company had reported revenues of $8.25 billion, $7.4 billion and $6.99 billion for 2013-14, 2012-13 and 2011-12 fiscals, respectively.
According to Infosys’ 2012-13 annual report, products, platform and solution business contributed 5.7% of its total revenues of $7.4 billion. It secured 51 deals in the same period.
The company had also announced investing up to $100 million in the business, which focuses on higher revenues from innovation and intellectual property rights (IPR).
During October-December of FY14, Infosys won 14 deals — eight for platforms and six for products. It had also launched TradeEdge, a platform for the retail segment.
Infosys closed Monday 2.33% higher at Rs3,177.9 on the BSE, while the 30-share Sensex ended the day 500 points or 2.2% up at 23,494.
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