Tough task for new Infosys CEO to win over founders
Infosys CEO Salil Parekh takes charge of the company on Tuesday with the expectation that it marks a fresh beginning at the Bengaluru-based company. His appointment “reduces management uncertainty with the addition of a proven leader.
BENGALURU: Infosys CEO Salil Parekh takes charge of the company on Tuesday with the expectation that it marks a fresh beginning at the Bengaluru-based company. Infosys is looking to put aside annus horribilisthat was 2017 — a year marked by a bitter, public fight between the founders and former CEO Vishal Sikka that eventually led to the latter’s departure.
It is interesting to note that Parekh was in the race for the top seat even in 2014. This time the former Capgemini senior executive did land the post as the board plumped for a seasoned IT services veteran with a track record of running a large operation. Parekh has nearly three decades’ experience in the Indian IT outsourcing industry, having handled clients in North America and Europe, something that greatly went in his favour.
Parekh’s immediate challenge will be to win over the broader firm and, in particular, co-founder Narayana Murthy. Analysts say the former Capgemini executive will also need to quickly lay out the strategic direction for the firm as Sikka had tried to veer the company away from its traditional strengths.
His appointment “reduces management uncertainty with the addition of a proven leader. It will be interesting to see how founder Murthy reacts to any of Parekh’s changes, as he made life difficult for the last CEO leading to his resignation. Unlike Sikka, Parekh will be based in India, which should help with founder relations”, Wells Fargo analyst Ed Caso wrote in anote last month.
For the moment, the new CEO seems to have Murthy on his side, who welcomed his appointment last month and said he was “happy” with the board’s choice. “Salil must move swiftly and definitively — and keep these founders in line — or we’ll just see history repeat itself... a fate not worth contemplating,” Phil Fersht, chief executive of HfS Research said.
Apart from managing the founders, who hold a near 13% stake in Infosys, Parekh’s immediate challenge will be to align the strengths of Infosys’ DNA and culture with the future strategy and direction of the firm and to decide quickly which of Sikka’s initiatives to keep investing in. It will be interesting to note whether he sets any ambitious revenue and margin target, something Sikka had but fallen woefully short. “It will be important that he should not over promise on growth or margins when he does this. A major problem of past Infosys leadership has been setting unrealistic expectations at a time of industry change. He will need flexibility on margins as he builds the new digital Infosys and flexibility on growth as the new digital business cannibalises the legacy book of business,” Peter Bendor-Samuel, CEO of Everest Group, said.
While its digital revenue still remains nascent, Infosys will hope Parekh, through his long experience of dealing with BFSI clients, will help garner more deals in that sector. BFSI contributed about 33% to the company’s top line for the second quarter ended September 30.
BENGALURU: Infosys CEO Salil Parekh takes charge of the company on Tuesday with the expectation that it marks a fresh beginning at the Bengaluru-based company. Infosys is looking to put aside annus horribilisthat was 2017 — a year marked by a bitter, public fight between the founders and former CEO Vishal Sikka that eventually led to the latter’s departure.
It is interesting to note that Parekh was in the race for the top seat even in 2014. This time the former Capgemini senior executive did land the post as the board plumped for a seasoned IT services veteran with a track record of running a large operation. Parekh has nearly three decades’ experience in the Indian IT outsourcing industry, having handled clients in North America and Europe, something that greatly went in his favour.
Parekh’s immediate challenge will be to win over the broader firm and, in particular, co-founder Narayana Murthy. Analysts say the former Capgemini executive will also need to quickly lay out the strategic direction for the firm as Sikka had tried to veer the company away from its traditional strengths.
His appointment “reduces management uncertainty with the addition of a proven leader. It will be interesting to see how founder Murthy reacts to any of Parekh’s changes, as he made life difficult for the last CEO leading to his resignation. Unlike Sikka, Parekh will be based in India, which should help with founder relations”, Wells Fargo analyst Ed Caso wrote in anote last month.
For the moment, the new CEO seems to have Murthy on his side, who welcomed his appointment last month and said he was “happy” with the board’s choice. “Salil must move swiftly and definitively — and keep these founders in line — or we’ll just see history repeat itself... a fate not worth contemplating,” Phil Fersht, chief executive of HfS Research said.
Apart from managing the founders, who hold a near 13% stake in Infosys, Parekh’s immediate challenge will be to align the strengths of Infosys’ DNA and culture with the future strategy and direction of the firm and to decide quickly which of Sikka’s initiatives to keep investing in. It will be interesting to note whether he sets any ambitious revenue and margin target, something Sikka had but fallen woefully short. “It will be important that he should not over promise on growth or margins when he does this. A major problem of past Infosys leadership has been setting unrealistic expectations at a time of industry change. He will need flexibility on margins as he builds the new digital Infosys and flexibility on growth as the new digital business cannibalises the legacy book of business,” Peter Bendor-Samuel, CEO of Everest Group, said.
While its digital revenue still remains nascent, Infosys will hope Parekh, through his long experience of dealing with BFSI clients, will help garner more deals in that sector. BFSI contributed about 33% to the company’s top line for the second quarter ended September 30.
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