Diversified sourcing must amid geopolitics, tariffs: Infosys Chairman Nandan Nilekani

Even as Infosys strives to be a truly AI-first company, there is a simultaneous and equal focus on being at the forefront of sustainability, Infosys Chairman Nandan Nilekani said in the company's annual report for 2024-25. Nilekani stated that as geopolitics becomes front and centre in everyone's lives, the company is taking cognisance of the world not as one single global market but as fragmented blocs and countries.

"This means making strategic choices and even navigating between these blocs. COVID brought into focus the critical and pressing need to derisk our supply chain and build viable alternatives. It was no longer enough to deliver just-in-time; we also had to factor in just-in-case."

He added that now tariffs are further driving home the point that there's a need to diversify sourcing. "Tariffs will be differentiated across products and countries and will likely keep changing. Bilateral and regional rules of trade will dominate. Supply chains will continue to shift as tariffs become another form of arbitrage," said the Infosys Chairman.

On the challenges surrounding artificial intelligence, Nilekani said that the early learnings from enterprise AI adoption give us a glimpse of the potential challenges that lie ahead. He noted that the advent of AI creates another arc of uncertainty. "As enterprises look at applying AI to every aspect of the business, some longstanding challenges will become imperative and self-evident to firms. For example, the need to modernise legacy systems, and the need to create data architecture so that all the firm’s data is consumable by AI in a holistic manner can no longer be put off," he said.

Firms will need to have an "AI foundry" for rapid innovation and an "AI factory" to scale successful innovations across the enterprise. "While embracing AI will bring a goldmine of opportunities, it will not be entirely without some foreseeable risks. Regulatory variances across regions will need to be incorporated into one’s strategy."

Speaking about climate change and the associated energy transition, he said that global climate deals will set the pace of change, and that so much of the future depends on innovation and the form of energy that will fuel the world forward.

"The only thing certain is that electricity will play a much bigger role in the days ahead."

He also talked about challenges businesses are facing due to rapid business and technological disruption, which is forcing them to adapt and advance. "Every business vertical is facing challenges of various kinds. Car makers are dealing with the transition from ICE engines to batteries. Pharma companies are looking at accelerating the pace of drug discovery with AI. Logistics companies are dealing with the complete reordering of global supply chains. Financial service companies are considering the tokenisation of their assets...manufacturing companies are navigating the advent of robots and 3D printing. Service companies are dealing with AI agents performing their tasks."

Nilekani expressed confidence stemming from the company's fortress balance sheet – characterised by high liquidity, zero debt, and the ability to withstand uncertainty – that it can help its stakeholders navigate their next challenge.