Infosys and General Electric are teaming up to create new technology that improves the efficiency and productivity of industrial machines, as they seek to fuel growth by expanding their portfolio of digital products.
The partnership aims to develop so-called Internet of Things technology that helps derive practical benefits from large amounts of data generated through connected devices, the companies said in a joint statement on Wednesday evening.
The Internet of Things -- the idea that products of virtually all kinds will one day be connected to the Internet and fully integrated -- is seen as key to software growth in the next few years, as connected devices are increasingly used for a wide range of activities such as controlling everyday electrical appliances from air conditioners to washing machines.
"The internet of things is about dissolving the layers of complexity and the intermediaries that create distance between the point of manufacturing and the point of consumption ...," Infosys's Chief Executive Officer Vishal Sikka said in the statement. "The value comes from bringing intelligence directly to these end-points, and in doing this we can completely reimagine the notion of industrial manufacturing."
Analysts reckon the partnership between Infosys and GE is a natural fit, given their common goals of catering to industrial manufacturing in the era of the Internet of Things.
"This is a positive development for Infosys as GE has a lot of expertise in Internet of Things, but it is not clear yet whether this will impact revenue and margins," said Amar Mourya, an analyst at IndiaNivesh Securities which has a "buy" rating on the Indian company's stock. "We will have to wait for the products developed under this partnership. Internet of Things will certainly play a very important role in the global IT industry over the next few years."
Both Infosys and GE are betting on new products and services in rapidly emerging areas such as the Internet of Things, automation and artificial intelligence, to meet their ambitious growth targets. GE is seeking to transform itself into a tech-savvy company, recently forming a new digital division with a goal of tripling software-related revenue to $15 billion by 2020. The U.S. company has been expanding its big data business, dubbed the Industrial Internet, alongside its core manufacturing businesses that span jet engines to gas turbines.
Under Sikka, Infosys's first non-founder head, the Indian software company plans to more than double revenue to $20 billion by 2020, via a slew of new artificial intelligence and automation technology offerings. India's $146 billion Information Technology (IT) industry, led by Tata Consultancy Services, has been stepping up investments in digital services to spur faster adoption by clients. Sikka, a former SAP executive, is also hunting for acquisitions to spur growth. Since taking over a little more than a year ago, Sikka has overseen two deals for a total of $320 million.
In July, Infosys raised its annual revenue growth forecast, betting on snapping up more large deals, after posting a better-than-expected first-quarter profit.
