Decoding the Infy reboot

In the end, it was not an easy decision either for Infosys or for Vishal Sikka to make. For Sikka, the poster-boy of the $20-billion German software product company SAP AG, taking a call on joining the troubled $8.5-billion Indian software services company must have been one of the toughest decisions of his career.

For Infosys, it must have been an equally difficult decision bringing in an outsider. Rumours of Sikka being more a ‘trophy CEO’ than a leader who could rejuvenate the beleaguered IT major were, in all likelihood, not comforting either.

The market too views the choice as a gamble. However, every member of Infy’s nominations committee, which picked Sikka, would like to believe otherwise.

But as the dust settles down, Sikka, who takes over from SD Shibulal next month, knows that he has a few things going for him. Working for a major multinational, in fact, the second largest in its segment, arms the person with a worldview that doesn’t come easily when one works out of India. One also can’t discount his biggest achievement: turning around the fortunes of SAP with his blockbuster product HANA (high performance analytic appliance), which enables processing of massive amounts of real-time data in a short time.

But for Sikka, 47, the exit from SAP hasn’t been without controversy. An official statement suggests he left the German firm for personal reasons; but according to several reports, the board was increasingly getting concerned about the fact that most of the top jobs in the company were with Americans and Sikka, a board member who worked out of the US and apparently harboured aspirations of becoming CEO, realised that his ascension might never happen.

Sikka was an extremely popular boss and was known to be very well networked and connected, according to Ameyablog, an SAP technology blog. “Whoever replaces Sikka has a very large gap to fill, not just in terms of technology expectations but also innovation and visibility within the community,” says the blogger.

But at Infosys, Sikka will have a completely different challenge to contend with, though the results will have to be similar to what he achieved at SAP. He may, perhaps, transform the company from an outsourcing provider to a technology major, something that Lou Gerstner managed to achieve when he took over a struggling IBM in the 1990s.

Some industry watchers feel that Sikka’s approach will be different from that of any of the past Infosys CEOs and there will be cultural changes within the company. “He is aggressive and will not wait for things to happen; he will make them happen,” opines Kris Laksmikanth, CEO of Head Hunters India.

According to Ameyablog, Sikka was known for networking with tough customers and building long-lasting relationships with partners and the technical community. His keynote speeches were very popular, says the blog. These are the very skills Sikka will need in plenty as he goes around fixing Infy’s troubles.

“What he needs to do in the next 90 days is meet the top 100 clients and tell them that Infosys is back in business,” says one of the company’s former senior executives. “He may not have the stature of Nandan Nilekani but his work with SAP should be good enough to open doors for him.”

While the initial message from Sikka might be welcomed by Infosys’ clients, more clarity on how the company plans to address major issues will be sought,” opines the marketing head of one of the top five Indian IT outsourcers.

According to another former senior executive, Sikka was able to perform well at SAP because it had a go-to-market strategy that he was able to benefit from. At Infosys, the product and platform space is small and is not doing well. Hence, Sikka will have a lot of work to rebuild that space and take it to a level where global competitors would start taking it seriously.

Sundararaman Viswanathan, Manager (Consulting), Zinnov, agrees. There will be a stronger push towards start-up-like thinking and a premium will be placed on knowledge, he says, pointing out that Sikka has headed start-ups and has a doctorate in computer science from Stanford University.

But there are others who believe that Sikka is not the change Infosys should have sought. They believe that the management was keen on hiring a brand than someone who had the skills to revive the company. “What remains to be seen is whether it will actually open doors with a calling card like that of Sikka’s. Infosys needs it badly,” says another former senior executive who worked closely with Shibulal. “Earlier, most CXOs would promise a meeting but it never happened.”

Back home, Sikka will have to lean a lot on his Indian colleague UB Praveen Rao, who is now the company’s Chief Operating Officer, to execute his vision.

Rao, ironically, will be the key to his success. He will be the one who will be more in touch with the employees in India and will be Sikka’s eyes and ears.

Known to be a soft spoken man, Rao apparently has studied views about Infosys. “He commands a lot of intimacy with the next level, is not very opinionated and is a nice guy to have as a second-in-command,” says an insider.

Sikka may open doors and snatch the big orders from competitors but the execution will have to be done in India. However, Infy hardly has any leaders left here because of a series of top-level exits during the 12 months. The newly elevated set of 12 leaders (senior executive vice-presidents) are untested at that level nor do they have the experience of working with a boss who comes from a different culture and discipline.

According to insiders at SAP, Sikka isn’t just a hard taskmaster but someone who has no patience with executives who are not sound in knowledge about their domain. “He took an instant liking to Anirban Dey, the former SAP Labs head for India, because he was one of the few whom he could relate to when it came to his sound knowledge about technology,” says an executive with SAP Labs.

Sikka is also not someone who likes PowerPoint presentations and would rather see executives explain their business plans with a whiteboard marker, something he always does.

Greyhound Research believes Infosys must put together a team equipped to understand and respond to the rapidly changing IT services landscape. “While a new leader can help set a new vision and path for the company to follow, the second-tier management and other key executives will ultimately make the new vision a living reality,” said Sanchit Vir Gogia, an analyst at Greyhound Research.

According to Peter Schumacher, CEO of Value Leadership Group, just being aware of the issues will not be sufficient. “Some additional mechanisms will need to be put into place to ensure that the company makes decisions based on current market realities rather than imagining that they can recapture the glory days of the early 2000s,” he adds.

Analysts believe that this approach of staying rooted in the present reality is the single most important thing for the company and everything should flow from that.

The current reality revolves around new technologies powered by cloud computing, mobility, social and business analytics. In addition, the hiving off of wholly-owned products and platforms subsidiary Edgeverve Systems could play a role in a new Infosys 3.0 strategy or provide the nexus for innovation across the company, according to Ray Wang, Principal Analyst, Founder and Chairman at Constellation Research.

NR Narayana Murthy has already laid the ground for some of those things. Infosys will soon start a fast-track career programme for high performers to boost morale. The company has come up with different processes to help software engineers improve productivity. This programme is for engineers who do not want to take on managerial roles, something that has been an area of contention within the company as software development personnel get the wrong end of the stick when compared with sales and marketing professionals.

Other things such as bringing in more automation and reducing wastage of engineers’ efforts are moves that should pay dividends.

Sikka will also have to contend with local but extremely tough competitors such as TCS, Cognizant and Wipro, who have built a considerable lead over Infosys over the last few years. The difference between TCS and Infosys in terms of revenue is so huge that Sikka will have to first fend off a strong challenge from Wipro and Cognizant before focusing on TCS.

He will have to start off by arming the dwindling sales team with more people, a bigger budget and will have to delegate powers as well as responsibilities. During SAP’s recent annual Sapphire conference, which is where most deals happen, Infosys it is learnt, cited budgetary constraints as a reason for not sending a big contingent to represent the company. “When you are losing clients, the obvious thing to do is to shore up the sales team and not cut their budget, which is what Infosys did,” says a former Infosys board member.

Eventually, what will help Sikka turn Infosys into a winner is the confidence of its clients and the trust of its employees.