The new CEO of Infosys, Salil Parekh, has a lot to fix to change the IT giant: Quartz –

The new CEO of Infosys, Salil Parekh, has a lot to fix to change the IT giant: Quartz


Infosys may have overcome a great challenge in finding a new CEO, but that's not even half the battle won for the second largest IT services company in the country that has been struggling for years to regain growth leader in the industry.

On December 2, Infosys said it appointed 53-year-old Salil S Parekh as its CEO and CEO as of January 2, 2018. A former IIT-Bombay alumni, Parekh joins Infosys from the company French IT services company Capgemini, where she was a member of the group's executive board, roughly equivalent to a position as executive vice president.

In response to the designation, the company's shares opened 2.6% higher in BSE today (December 4). At 11.40 a. M., The stock traded 3.8% each.

The applause among investors is justified, as the appointment of Parekh ends a period of speculation caused by the abrupt resignation of Vishal Sikka, the first non-founding CEO of the company in August.

Described by his former colleagues as "a very important man", Parekh played a vital role in the construction of the Capgemini team in India of only 300 people when he joined in 2000 to more than 60,000 in 2015. Parekh had come to the French company then acquired the consultancy division of Ernst & Young where it was a partner since 1992.

"He (Parekh) has almost three decades of global experience in the IT services industry," the president said in the statement. co-founder of Infosys, Nandan Nilekani. announcing the appointment of Parekh. "He has a strong track record of executing business changes and managing successful acquisitions, and the board believes he is the right person to lead Infosys in this transformative moment in our industry."

The task prior to Parekh requires all these skills, and much more.

Restore reputation

Parekh joins Infosys at a time when the Bengaluru-based firm has been in the headlines for all the wrong reasons, eroding its once-stellar reputation.

In February, an anonymous whistleblower raised allegations of financial irregularities in the acquisition of the Israeli software company Panaya for $ 200 million from Infosys. Around the same time, the founder NR Narayana Murthy made a statement in the media claiming that the company's board of directors was acting in a way that implied attempts to "hide something". He also questioned the rupture of Rs17.4 crore ($ 2.7 million) he paid to former CFO Rajiv Bansal, asking if it was "silent money".

The meeting, then chaired by R Seshasayee, tried to calm the situation by providing a point-by-point rebuttal on all the problems raised by Murthy. However, between that time and August, Murthy and his fellow founders continued to pose the same questions several times. On August 18, Sikka resigned from Infosys, citing "the constant doubling of the same problems over and over again." Seshasayee, along with independent directors Jeffrey Lehman and John Etchemendy, also resigned.

Since his return to Infosys in August, Nilekani has been trying to put an end to this uncertainty. "The board also firmly believes that it is time to put an end to these problems, seek the support of all interested parties to look to the future and collectively focus on strategy, operations and growth," said a statement from the company ( pdf) on October 27. But he was not able to completely pacify Murthy. [19659002] "If there is something in the news every other day, the administration ends up spending a lot of time dealing with the press, clearing the air and sharing their point of view, that can not be good for any company," said Amit Tandon, founder and executive director of the proxy firm Institutional Investor Advisory Services (IiAS), to Quartz in October.

The recent fall of leadership may also have left customers confused about the company's future strategy, which Parekh will have to fix. "Sikka came from a software product pool and tried to create the Infosys product offerings … So there is a misconception in the market that Infosys is moving to become a product company, that Parekh will have to undo, "said Sanchit Vir Gogia, chief badyst at Greyhound Research. "You will need to establish that the company is focused on your bread and butter IT service business."

Team Rebuilding

In 2014, when revenue growth began to slow down and the last founding CEO of Infosys, SD Shibulal could not fix it before retiring, a key weakness was exposed: the lack of internal leadership.

The majority of internal candidates, the former president BG Srinivas; the then head of the American company Ashok Vemuri, and the former financial director V Balakrishnan, among others, were considered unfit and then resigned. This problem was repeated when Nilekani had to intervene earlier this year. In addition, Sikka's resignation led to further erosion in the Infosys leadership team with departures from senior vice president Sanjay Rajagopalan and chief technology officer Navin Budhiraja, among others.

"Building leadership will be a major mid-term challenge for Parekh," Gogia de Greyhound said. "Managing and maintaining the trust of employees is very important for Infosys at this time."

The task will not end simply by rebuilding high-level talent. Parekh will need to regain the trust of the nearly 200,000 employees of the company (pdf) as well. Attrition has been on the rise at Infosys since February 2017, when the entire fight against Murthy versus Board began.

Prepare for the worst

The last few years have been one of the most difficult periods for Indian IT, particularly due to the changing technological landscape. It is estimated that the industry will grow only 8% (pdf) during fiscal year 2018, compared to the annual growth of more than 30% that used to register a decade ago.

While Sikka tried to bring Infosys up to speed by training employees and making acquisitions of companies like Panaya and the e-commerce service provider Skava, the growth has not yet stabilized; in fact, it has even lagged behind in the industry. Therefore, a key challenge for Parekh will be to help Infosys win new contracts in major operations and increase revenues, while investing in more recent capabilities, such as artificial intelligence and automation, that will keep the company relevant in the long term. .

at the same time, the industry must also deal with other constant threats: visa regulations. It is already a complicated situation, the IT problems of India have worsened since Donald Trump moved to the White House earlier this year. The administration of the United States has often indicated that it can make it difficult for immigrants to obtain work visas in the United States. Indian IT services companies are among the biggest beneficiaries of such visas and have built their businesses around supplying cheap Indian workers.

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