Key Challenges For Infosys' New CEO Salil Parekh

by Sohini Bagchi    Dec 04, 2017

Salil S Parekh’s appointment as the new CEO and MD of the IT major Infosys has put an end to all the speculations and uncertainties over leadership in the organization. However, the road ahead for Parekh will be challenging as he has a major task to address concerns around the company’s future, given the fast-changing technology landscape.

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In 2014, when Vishal Sikka, a former SAP AG executive board member, takes over from S.D. Shibulal as Infosys’ chief executive to revive the fortunes of the company which was losing market share, he aimed at a transformation dictated by advanced technology. The first couple of quarters indicated much optimism with Sikka’s dynamic management style, acquisition plans, innovation and new approach towards people management [albeit with a few negative numbers]. The climax however was bitterly dramatic, when he abruptly resigned as Infosys’ CEO and MD in August following a prolonged standoff with promoters on allegations of corporate governance lapses and hefty severance packages of former executives.

Sikka’s exit created an uproar not only within the organization, but had a negative bearing on the entire Indian IT industry and again left Infosys with no choice but desparately look for a new CEO who can bring back Infosys on track. After nearly four months and innumerable speculations, the search ended with the appointment of Salil Satish Parekh as the managing director and CEO of Infosys, a top executive at global IT services giant Capgemini prior to this assignment. This also marks the second successive time that Infosys has chosen a rank outsider to helm the company.

Read more: Infosys Names Capgemini’s Salil Parekh As New CEO

While it is interesting to note that Parekh lost out to Vishal Sikka the last time Infosys was hunting for a new chief executive officer in 2014, he has now been tasked to lead the company. The 50-something IT veteran is described as a soft-spoken yet determined man who was chosen from over two dozen candidates this time. He is armed with a Master of Engineering degrees in Computer Science and Mechanical Engineering from Cornell University, US, and a Bachelor of Technology degree in Aeronautical Engineering from the Indian Institute of Technology, Bombay.

The appointment of Parekh naturally triggered speculation over whether he will continue with the transformation begun by his predecessor Vishal Sikka in initiatives such as cloud computing, automation and artificial intelligence and also set realistic expectations about the company.

According to experts within and outside the organization, Parekh could be the right fit for Infosys, even though there are some specific challenges before him which he needs to address.

“The three key challenges for Parekh will be to invest in digital technologies and acquisitions, build and provide an aggressive sales leadership, and sustain a global culture at Infosys,” industry veteran Ganesh Natarajan told PTI. Parekh’s appointment also received a thumbs up from Infosys co-founder NR Narayana Murthy, who had been vocal in his criticism of Sikka and the previous management of Infosys. ”I’m happy that Infosys has appointed Salil Parekh as the CEO. My best wishes to him,” Murthy said.

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Kiran Mazumdar-Shaw, Chairperson of the Nomination & Remuneration Committee, stated, “After a comprehensive global search effort, we are pleased to appoint Salil as the CEO & MD. He was the top choice from a pool of highly qualified candidates.  With his strong track record and extensive experience, we believe, we have the right person to lead Infosys.”

Nasscom President R Chandrashekhar said in a statement, “Parekh is well entrenched in the industry and has international experience as well as a good understanding of Indian IT ecosystem. As the traditional outsourcing business faces a margin crunch, Parekh will have to identify new high-margin areas like big data, cloud and analytics, along with new markets.

The domestic IT services sector has been facing challenges such as pricing pressures and volatility in global IT spending. On the positive side, Parekh comes armed with expertise in new services; one of the areas he led at Capgemini was the cloud business. He also played a pivotal role in building Capgemini’s operations in India and then, in Capgemini’s acquisition of iGate in 2015.

There are challenges specific to Infosys as well. Parekh’s appointment comes at a time new services and software contribute to around 11 per cent of Infosys’s revenues. While new services include the cloud ecosystem, cyber security, Internet of Things, engineering services and others, the new software space comprises products such as Edge, Nia, Panaya and Skava.

Another key issue that many point out is that Parekh, who is also an outsider just like Sikka, should keep peace with the management and founders and board, believe experts. He will have to move Infosys out of issues such as corporate governance which have hounded it in the recent past. Parekh had joined Capgemini in 2000 after the consulting division of Ernst and Young was acquired by the French IT services company and is expected to deal with this challenge, believe analysts.

The expected work visa changes (H1B) in the US, the biggest market for Indian IT firms, has become another concern for Infosys. He will have to continue with the automation strategy that was initially implemented by Sikka, but may have to lead it with an increased vigour.

Finally, he may have to work around retaining the talent and slow down attrition at the high-level. “Parekh is a good integrator of people, Board and promoters, and has experience of a multicultural environment. He will have to focus on hiring people who are strong in digital technologies and global sales as the IT industry, as also Infosys, is in midst of transition,” Natarajan said.

To devise a renewed, reliable strategy, Parekh needs to bring in his global experience, be in the good books of the co-founders and create a disrupted technological environment that revolves the Internet of Things, artificial intelligence and automation. He has the next five-years to revive the fortune of Infosys and bring the company back on the growth track.