Infosys' CEO Sikka speaks during a news conference at company's headquarters in Bangalore
"It gives us scalability, it gives us isolation and accountability of individuals," said Vishal Sikka, Infosys CEO on breaking down company into smaller business units. In Picture: Infosys' CEO Sikka speaks during a news conference at company's headquarters in Bangalore.Reuters

A global investment bank has expressed its doubts about Infosys' 'Vision 2020', a five-year plan to increase revenues to $20 billion.

While announcing its results for March quarter, Vishal Sikka - CEO of India's second-largest software services exporter - said the company aims at boosting revenues to $20 billion from current $8.7 billion over the next five years. He added that Infosys will also try to improve employee productivity by 50 percent.

UBS, on the other hand, says it is doubtful of the company's capacity to achieve the target and sees it is as a "significant challenge".

" will entail substantial organisational change with a limited safety margin," UBS' analyst Diviya Nagarajan told The Economic Times in a client note on Wednesday.

Bengaluru-based Infosys, once the leader of the country's $150 billion IT sector, has been struggling to sustain its market share due to lack of innovation and high employee attrition rate.

The Swiss bank says the IT major has to fully achieve its intended acquisition plans to reach the revenue target by 2020 "without further leverage".

"M&A is likely to be expensive; we estimate a payout of $6-9 billion with some balance sheet leverage," the analyst said.

The IT giant increased the size of its startup fund by five times to $500 million in January this year. Besides, Sikka has allocated $250 million for investments in Indian startups.

The company has reportedly held discussions with software products think-tank iSpirt's M&A team in April on "how to best tap into India's software product ecosystem".

Further, Infosys' pricing of its services to clients - which remained weak in recent years - could weigh on its revenue projections if they are revised down further.

"We are concerned that Infosys' comments on industry-wide pricing trends could be interpreted by its customers as willingness to lower prices, and/or set off a pricing war among vendors," said Nagarajan.

The company will most likely continue to face difficulties in retaining staff as many senior-level executives quit over the past two years. In March, Infosys announced an average salary hike of 6.5 percent as it faces the highest attrition rate among domestic IT firms.

"In addition to changing the behaviour and mind-set of over 170,000 employees, the company also faces the task of motivating those working for 'yesterday's business', as it now terms over 90 percent of its existing services," said Nagarajan.

UBS has a price target of ₹1,600 for the Infosys stock.

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