Infosys’ new chief executive Salil Parekh should focus on building a strategy on top of the digital transformation approach that his predecessor began, and take advantage of being based in Bengaluru, the headquarters of the company.
“Given his past record and the board's forward looking statements it seems likely that the general direction and strategy under Sikka will continue,” said Peter Bendor-Samuel, the CEO of research firm Everest Group.
“Infosys is well-positioned to participate in the arbitrage legacy consolidation which is occurring and I would expect Salil to position Infosys to capture a strong share of this work,” he added.
Parekh was named the second non co-founder CEO of Infosys on December 2, following the exit of Vishal Sikka, who stepped down following a very public battle with co-founder NR Narayana Murthy over issues of corporate governance, Infosys’ acquisition of Israeli software firm Panaya, and questions over Sikka’s high salary and use of private jets for travel.
The board blamed co-founder NR Narayana Murthy for Sikka’s resignation, and was supposed to find a replacement by March 31, 2018 under co-founder Nandan Nilekani who came back to Infosys as non-executive chairman of the Board.
“Salil will likely be a better fit with Infosys as he provides a better balance between the traditional Infosys business and making the changes that need to be made to get them back on top in the industry. The only solution is to have someone who can work with the board, keep the existing revenue ticking along and make the right M&A moves in the market with all the stakeholders aligned,” said Phil Fersht, CEO of research firm HfS Research.
He added that the perfect strategy for Infosys would be to create two large divisions — one focusing on strategy and consulting, as well as operations.
Bendor-Samuel stressed the need to reset investor expectations on margins, focus on building a new delivery model that moves away from the factory arbitrage model, “focus on clients and not its self”, and keeping the commitment to the "aggressive pricing established under Sikka. The market will not tolerate a premium pricing position at this time.”
With Infosys and other Indian software exporters facing visa and trade issues in their largest market, the United States, some believe Parekh could look at expanding presence in Europe.
“Salil, in my opinion would advocate local hiring for the European markets and fall upon resources within the CapGemini's global pool,” said Rajiv Dabhadkar, founder of the National Organization for Software & Technology Professionals.
He added that Infosys could benefit from minimizing their labour redundancies and increasing their profit share.
Bangalore a positive, need to focus on execution
Being in Bengaluru is a certain positive for Parekh, at least in the short term, as he sets out to build confidence among the co-founders and the company’s Board.
“At this time what Infosys needs is a steady hand, Sikka did a nice job of raising Infosys profile in the digital transformation space, which has set the table for Salil to be focused on execution. Arguably, where Sikka failed was in bring the founders and a sizable segment of the rank and file along. A more low profile approach may prove successful,” said Bendor-Samuel.