Reviving growth tops Infosys boss Salil Parekh’s agenda

BENGALURU: Infosys will seek to revive growth and create a fresh team of leaders when chief executive Salil Parekh takes charge in January at the Bengaluru company, which has battled nearly a year of internal turmoil and slashed revenue forecast for the fiscal year. Parekh, with a management style that analysts described as ‘firm but gentle’, will be expected to restore stability, stem the tide of senior management exits and return the $10-billion company —once regarded as the bellwether of Indian outsourcing — to industry-level growth. “He (Parekh) is good at getting things done but won’t spend time talking things up,” a former Infosys executive told ET. He was contrasting the management style of the computer science graduate who led the Indian operations for French multinational Capgemini with that of predecessor Vishal Sikka. On top of Parekh’s agenda will be the need to claw back revenue growth rate to bring it on par with industry peers. This fiscal the company expects to grow at about 6.5% in constant currency (adjusted for currency fluctuations). In contrast, industry body Nasscom has forecast growth rates of 7-8% for the sector. Infosys shares are marginally down from a year ago, but have recovered losses since Sikka’s exit in August. Experts Want Free Hand for CEO Widely regarded as a doer, and not a disruptor, Parekh will be based out of India, unlike Sikka who functioned from Palo Alto in California. “Under Sikka, there were grand plans, lots of branding of internal initiatives, but that was not always followed through with execution. The $20-billion (revenue) target (by 2020) was a huge mistake,” the former Infosys executive said. An IT industry consultant who has tracked the sector for two decades told ET that while Sikka read the market right, he was unfamiliar with the people-intensive approach to IT services. In an industry roiled by slowing growth in the dominant market US — due mainly to automation and protectionist rhetoric —the strategic message is not very different for Indian IT outsourcers. “Be it Rajesh Gopinathan (CEO of Tata Consultancy Services) or (Abid) Neemuchwala (CEO of Wipro), or even Sikka for that matter, they all have been clear where the business is going to go. It is not so much the strategy. The question is, can you execute on that strategy?” said the consultant, who reckons Parekh has the cultural fit to deliver change at Infosys. “This will take at least four quarters,” he added. Boosting employee morale is also expected to be key part of Parekh’s agenda. Many Infosys employees told ET on the condition of anonymity that they are concerned about the direction he would want them to take. “No one is expecting him to come in and distribute iPhones, but you need to know what is happening. If the company changes direction every three years then people get tired,” an Infosys employee said. Sikka had handed the latest iPhone models to 3,000 top performers in 2015 and loosened policies such as work-from-home for certain teams. Infosys has over 198,000 employees. To address the demand to grow operations onsite, the company has said it will hire 10,000 people in the US over the next two years. In August, cofounder Nandan Nilekani took charge as nonexecutive chairman following the sudden departure of Sikka after months of friction with the company’s iconic founder NR Narayana Murthy over alleged lapses in corporate governance. An independent inquiry has absolved the company of any wrongdoing. Nilekani had put some of Sikka’s HR policies, such as more flexible work-from-home options, on the back burner. Flagship programmes like zero-distance, aimed at ensuring every project delivers some innovation to clients, have lost steam. Experts feel that while all new CEOs bring new executives with them, there is unlikely to be a “major house-cleaning at the top in Infosys in the near future”. “There are already plenty of open positions due to the turnover from the previous CEO’s departure, and the remaining team is committed to Infosys and highly talented. Hence, there is plenty of room to bring in new leaders without driving out the old,” said Peter Bendor Samuel, CEO at IT consultancy Everest Research. But what corporate governance experts want the most is for the CEO to be given a free hand. “The hope is that the founders do not micro-manage Salil Parekh, just because the MD is based out of Bengaluru. And they should let the MD build his own team and strategy for the company,” said Shriram Subramanian, founder of InGovern Research Services, a corporate governance advisory firm.
Source: ET