5 things Infosys' new CEO Salil Parekh would want to focus on
Salil Parekh, who will take charge as the CEO of IT major Infosys in January, has his task cut out. Here are five areas that Parekh and the board of Infosys would want to focus on:
1) Working on bringing back the original charm of Infosys, both as a services provider and as one of the top employers of the country. Its image had been dented by the squabble between co-founder and former chairman NR Narayana Murthy, on the one side, and the board led by R Seshasayee as chairman and Vishal Sikka as CEO, on the other. But to bring back the charm, Infosys will have to tick a few boxes.
2) Convince Nandan Nilekani to continue as non-executive chairman for at least another two years.
There would be a temptation for Nilekani to ease out of the firm once its new MD and CEO is in place, to focus on his other activities as an angel investor, chairman of EkStep, a non-profit literacy platform, and president of the governing body of the National Council of Applied Economic Research (NCAER). This is despite his commitment that he would continue to work for Infosys “as long as was necessary”.
Nilekani, who had served for five years as CEO of Infosys from 2002 to 2007, brings in a rare combination of business acumen and people skills, and is a crucial link between the co-founders and the company’s board. Remember, much of the trouble for Infosys arose from the co-founders losing trust in the management when it came to issues of corporate governance. Nilekani would be able to keep up that trust, until Parekh gets well entrenched into the company.
3) Keep the corporate governance flag flying high. The board, under Nilekani, has sort of laid allegations of corporate governance lapses in the company to rest, giving Sikka a "clean chit". Murthy had flagged off issues which he believed were departures from the company’s corporate governance principles - Sikka’s flamboyant lifestyle, including his use of corporate jets and his exorbitant salary, a cloudy deal to acquire Israeli firm Panaya where Infosys was accused by a whistleblower of having paid much more than its actual value, and most importantly, allegedly paying off former finance head Rajiv Bansal to buy his silence over the Panaya deal.
Murthy took strong objection to the events at Infosys and mounted pressure on the company’s board to come out clean. Ever since Nilekani’s return, Murthy seems to be happy not to stir up another controversy. But that is no assurance he never will, considering that he is a stickler for transparency and accountability.
Communications lines among Murthy, the other co-founders and the Infosys board should be tuned to perfection to avoid any further showdowns of the kind the company had recently witnessed, ending in Sikka’s resignation in August.
4) Continue Sikka’s strategy of modernising the company, making it future ready. Sikka has been able to give some sense of direction to Infosys after he had taken over, as compared to the uncertainty that dogged the company since the days of the economic meltdown in 2008.
One of the first things he did was to overhaul the organisational structure, doing away with SBU (strategic business units) format in favour of a consolidated delivery approach to achieve greater economies of scale.
He later set a target of reaching $20 billion in revenues and near doubling the revenue per employee to $80,000. This, however, could not be achieved with the traditional modes of doing business, which Sikka felt would be wiped out in a few years. The days of the cost arbitrage are ending for countries such as India, and industry will seek more automation and digitalisation. That foresight is bound to reward Infosys in the not-too- distant future.
5) Last but not the least, stem attrition and remove fear of the unknown from the employees’ minds.
For the year ended March 2017, the consolidated attrition rate from the company was at 19.2 per cent as compared to 18.7 per cent for the year ended March 2016.
faced with slowing long-term deals and the big changes on the technology front that is making several traditional jobs obsolete, Indian IT companies will resort to large-scale layoffs.
Glimpses of this have already been observed in the case of Wipro, Tech Mahindra and Cognizant.
In such an uncertain atmosphere, Infosys will have a tough task keeping the morale of its staff high, but it will have to keep doing that consistently, especially since it is just recovering from a very bad bruise.