Infosys' new CEO Salil Parekh is a good fit, but questions loom on strategy amid disruptive technological change
Narayan Murthy has not been effusive in his early welcome for Salil Parekh. For Parekh, this might contain a watch-your-step message.
You could consider it a lucky moment for Nandan Nilekani, executive chairman of Infosys in his second coming at the company. In Salil Satish Parekh's being bypassed for the CEO's post at global technology consulting giant Capgemini, the co-founder of the Bangalore-based IT services leader has found a near-perfect match for its own CEO slot, given its predicament following the uneasy resignation of former SAP whizkid Vishal Sikka last August.
From all indications, Nilekani may want to keep his intent of stabilising the leadership and moving out as soon as possible -- and 53-year-old Parekh seems just the man for that. With his roots at IIT Mumbai (Nilekani's alma mater as well), his long years at consulting firm Ernst & Young and later as an outsourcing expert with a strong India as well as global footprint at Capgemini, Parekh is very much the suitable boy for the top spot at Infosys. His strong track record in services is a substantial asset for Infosys.
But deep questions remain on both his future and that of Infosys, especially on the long-term strategy going forward. The biggest of them all: Does Infosys need a thorough makeover to face a new age in technology, or is a calibrated mix of continuity and change enough?
For close observers, there are lingering questions on why Sikka was made to leave under pressure from co-founders led by N R Narayana Murthy. After much noise and innuendos about corporate governance lapses in severance pay for former chief financial officer Rajiv Bansal, there seems to have been some kind of an honourable silence in favour of Sikka -- as if to suggest that what the co-founders wanted was his resignation, and not much else.
Murthy has not been effusive in his early welcome for Parekh. His terse 'best wishes' welcome suggests he may be once bitten, twice shy. For Parekh, this might contain a watch-your-step message. Murthy may be a minority shareholder, but is an activist board member who commands respect from tens of thousands of Infosys employees and the general public. His vigilant eyes are certain to follow the new CEO who has to try and avoid a Sikka moment.
As for Sikka, in hindsight, his sin seems to have been a bit of extravagance or generosity that did not sit easy with Murthy's austere, penny-wise style. Parekh has been credited with swinging in acquisitions to help Capgemini, and he would have to watch his shopping bills, given the great amount of reluctance displayed by Infosys during the Murthy-Nilekani years in going for buyouts.
The looming question is: Will Sikka's technological vision be integrated into a new-look Infosys or given a slow burial? This is an important question as the information technology industry worldwide goes through upheavals caused by software automation, artificial intelligence and cloud computing. These three things have made it difficult for the old formula pursued by Infosys -- of blending cost-effective software programming with some consulting to serve large clients and get steady streams of high-margin revenues.
Sikka had taken a sharp turn towards product innovation at Infosys, given his own experience as a high-end product/platform architect at SAP. He tried to blend in services within and around that. Now, his handpicked executives have left Infosys, but the product vision and some of the innovations he introduced are still around, best exemplified by the artificial intelligence platform, Nia. As of last month, Infosys was sticking to Nia and eyeing big-ticket partnerships in data analytics and business intelligence.
Given cloud-era platforms such as IBM's supercomputer Watson and SAP's HANA, Infosys can simply adjust itself around these cutting-edge behemoths much the way it adjusted to SAP's old enterprise software in the early days of network computers. However, that does not seem easy. These new platforms are positioned for easier direct use by business clients. Picture them like do-it-yourself kits.
This is somewhat akin to what Sweden's IKEA did to furniture. Why do you need to hire a carpenter at home when you can assemble the furniture yourself? And why would a Fortune 500 client need a major deal with a large IT service company like Infosys if smaller partners working with in-house teams can leverage large cloud platforms?
The situation may be more complex than that, but it is pretty certain that a new IT ecosystem is emerging that calls for large-scale reinvention at Infosys for it to be able to grow on a scale similar to what it has done in the past.
To craft a new, viable strategy, Parekh needs to bring in his global experience, look at the co-founders and their austere values and then eye a disrupted technological environment that involves the Internet of Things, artificial intelligence and software automation. Given that he has been given a five-year contract, one would hope he would get sufficient elbow room and encouragement if he is to walk a tightrope between old-fashioned continuity and phenomenal change.
(The author is a senior journalist. He tweets as @madversity)
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