Vishal Sikka will adopt to create a strong differentiation in the marketplace
The appointment of Vishal Sikka as the chief executive officer and managing director at Infosys could provide the IT services major a true cutting edge in software products play. Sikka comes with a formidable reputation with a doctorate in artificial intelligence from Stanford University and his last job being the chief technology officer of technology giant SAP, not to forget that he has had his own entrepreneurial journey.
Infosys, which seemed to be rapidly losing direction since 2011 had to get back its iconic founder NR Narayana Murthy to steady the ship. Now, the appointment of Sikka has brought in the much needed fresh air for the IT major. Appointing an outsider tends to bring fresh perspective to inherent legacy issues plaguing companies. Free from the baggage and expectations associated with firm veterans, Sikka can look to usher new life into Infosys, said Peter Bendor-Samuel, CEO, Everest Group, in his blog Sherpas in Blue Shirts.
There will be loads of expectation on Sikka as he shoulders the responsibility of steering Infosys through an unchartered territory in the IT outsourcing and offshoring world which is getting redefined rapidly.
Today, one cannot speak of cost as an advantage of the Indian IT services companies as it is a given and is well understood by the market. The need of the hour is to position oneself as being in the grasp of the technology changes with the ability to deliver solutions not just a service.
Sikka is expected to bring this gravitas to Infosys as he is well connected with the technology world and keenly understands the shifts that is taking place. Ray Wang of Constellation Research in his blog post said, Constellation expects Sikkas selection to re-invigorate Infosys focus on Products, Platforms, IP and Innovation. His Silicon Valley background and network would also infuse the much-needed acquisition zeal into
Infosys growth strategy.
The products, platforms and solutions (PPS) segment of Infosys contributes only 5.1% of the total revenue and bigger bets are being placed that this would turn larger in the days to come. The IT major has already started a separate subsidiary to focus on this segment and it remains to seen what strategy Sikka will adopt to create a strong differentiation in the marketplace.
The other area where there would be significant interest among the investors and analysts alike is how the new CEO is going to connect with the customers. These are the bunch of people whose primary considerations are the stability in the outsourcing service provider and the ability to deliver. Sikka does not have the experience of directly leading such a large organisation.
Samuel in his blog post said: Since he comes from primarily a product-driven business, it will be interesting to see how he adapts to the IT services industry, which has inherently different business dynamics and challenges. The focus will be on streamlining project management, client delivery, and sales efforts. Sikkas experience in driving sales and marketing at SAP will be a crucial asset in this regard. Being a CTO of a products-based company is an entirely different ball game than leading a global services behemoth, as product-driven businesses rely primarily on the strength of intellectual assets, while services businesses are an amalgamation of resource management, delivery, and expectations handling.
The biggest beneficiary from Sikkas announcement will be the employees of Infosys as it brings to an end all the talk about who would be the next CEO. This was, in fact, a huge
distraction within the company as employees were more interested in the talk of CEO race.
However, this would also be a challenge for Sikka who would have to take every step to calm down the anxiety among employees and ensure that there is some continuity in management. As Partha Iyengar, country managerresearch, Gartner India said, The new CEO will have to move very quickly to first calm the three key stakeholders, employees, customers and investors in that order. Infosys cannot afford any more resource departures especially at the senior level. He will next have to establish credibility with those stake-holders again, in a fairly short period and then energise them in the medium to long term.
However, there are other challenges galore for Sikka and the biggest one will be that of cultural. It is not easy to transform a services oriented company into a solution focused entity as the mindsets are as different as chalk and cheese.
Secondly, the new CEO will also have to tread carefully with the existing management as any wrong messaging could act as an impediment to the forthcoming strategy of Infosys. Here it is also important to keep the aspiration of the top level executives aligned with the future plans of the company.
The biggest expectation to be met by Sikka will be that of the stock market. Given the weightage of Infosys scrip on the indices and how it can swing the market, there are no answers on which direction it will move. Infosys is a strange animal on the markets and Sikka will have a one-year honeymoon period before they start demanding answers, said a former employee of Infosys.
The induction Vishal Sikka as the fifth CEO of Infosys and the first outsider is considered as a welcome gamble by the IT major. It remains to be seen over a tenure of five years whether he will be able to replicate a success like the HANA platform at SAP, his former employer.