Vishal Sikka sanguine about Infosys future11 min read . Updated: 21 May 2015, 02:18 PM IST
Less than a year after taking the helm of Infosys, CEO Vishal Sikka is a lot surer about which way the company is headed
Bengaluru: Less than a year after taking the helm of India’s second-largest software services exporter, Infosys Ltd’s chief executive officer (CEO) Vishal Sikka is a lot surer about which way the company is headed.
“I’m vastly more confident and comfortable about the future," Sikka, 47, said in an interview. “Most people do not really understand what it was like when I started. We needed to stabilize then. And now, we all are excited. People are excited because they know they are involved in something great."
At the time he took over on 1 August as the company’s first non-founder CEO, Infosys was seemingly foundering after a dozen top-level exits, having lost its tag as the bellwether of the software services industry after falling behind its peers.
The former SAP AG executive unveiled a strategy called ‘new and renew’ to bring about a cultural shift in the mindset of its workforce and make it embrace new-generation technologies, including automation and artificial intelligence.
Sikka is confident that the initiatives Infosys has taken under his watch should help the company clock 13% growth in its traditional software services exports business in each of the coming five years as its sets out to become a $20 billion entity by 2020.
Infosys also remains focused on winning more “mega deals" and generating additional business from existing clients, through a clutch of measures including design thinking, a user-centric approach to solve problems.
In the interview, Sikka said the target of $20 billion in revenue by 2020 should be looked at as more of a “guidepost"; recent acquisitions of automation firm Panaya and mobile commerce firm Skava are measures that will help the company work towards it.
“About $16.5 billion would come from renewing the existing business, a result of design thinking, innovation culture and zero distance coming into every project. That means growing at 13%, which I believe is very much achievable," he said.
What have been some of the learnings until now?
On the positive side, the biggest thing we have is education. Infosys, in my sense, is by far the best teaching institution globally. Not only in IT but in any industry. This is my assessment. The long-term confidence I get is because of this. So whatever skills we need, we can get. We have the ability to teach to our students. So if I decide, we need to train 10,000 people on a particular technology, say Hadoop, we can do this. This is an incredible power.
And what are two-three things that you have found more difficult to change than you anticipated when you took the job?
In Western companies, you have a degree of operating processes and systems. But here (at Infosys), we are not even close to it (when it comes to) the basic operational systems, efficiencies. Surprising thing is that people have told me Infosys is the standard bearer for these processes in India. But from what I see, we are far behind on forecasting, pipeline building, (and) ability to do real-time reporting.
Since Mr. (N.R. Narayana) Murthy (Infosys co-founder) left 10 years ago, there is a sense that I get for the last several years, even as the company grew a lot in terms of employees and business, the internal process did not keep pace with it. Also, you have to remember that just before I joined, there were five executive board members. Three were founders who collectively used to share the burden. So now, the burden of five has fallen on we two—Pravin (U.B. Pravin Rao, chief operating officer) and myself.
The second one—it is structural, and it impacts us and the rest of IT companies—is that we have become very professional order takers. We do what we are told to such a degree that we don’t even think. And this is the biggest thing I want to change. David Kelley (design guru, founder of Stanford’s design school) calls it creative confidence. I want anyone walking in the company to interact with one of our customers and tell them some key things we can do to help change them.
Have you been able to change this mindset or bring in this cultural change?
Not yet. So for any employee to interact with a customer and help them, we are far from it. It will take time. But to a lot of people, it has happened. But it has not happened to the depth and breadth it should happen. But to a remarkable degree it has happened. We have crossed 31,000 people who have taken a design thinking class. It’s not like we have a video and someone has seen the video. It is an immersive experience.
One day-long design thinking process. Is it enough when many of your peers are reskilling most of their workforce through very structured, detail-oriented processes?
A one-day class is enough to turn on a switch! Make a person think. It is not enough to turn them into designers. The first thing is turn on a switch. Hey, we need to ask, why have I not been thinking? I have seen many examples. Each one of them is very depressing and makes you angry. But that has to be changed. People don’t talk to others. They will not talk to others. This is the most jarring thing what I saw. People do diligently what they are told. The master service agreement becomes the gospel. It tells you what you should do but what it doesn’t tell you is the things you can bring in to do it better. In any area of science, we don’t write without mentioning what others have written. We all grow by standing on the shoulders of giants. How can we expect to grow if we don’t have that mindset?
Critics say that the biggest risk to your strategy is that you are “over-promising and under-delivering", contrary to some of the biggest turnarounds in corporate history globally. Don’t you believe the biggest risk for Infosys is credibility, because you continue to maintain the company will achieve 12-14% growth by September 2016? You grew at less than 7% last year.
Of course, by September 2016, Infosys will be able to come to industry-matching growth numbers. Have I been over-promising? Of course not. There is sense of excitement about what we can do. And this has been our consistent commentary. There (have) been a lot of internal initiatives (that) we have undertaken.
The market believes the company is positioning itself uniquely and your comments over the last several months suggest that the model followed by your peers is dead and Infosys is working towards something new. You concede that your comments on this entire strategy of ‘new and renew’ have been a tad misinterpreted, which has actually led to huge expectations?
Are you kidding? (laughs). I don’t agree. I did not create the perception, actually. I wish I could spend more time on the ‘new’. I live for the new stuff (laughs). I wish I don’t have to get into how our top 15 accounts are doing. I focus on ‘renew’ entirely. You know, I was in Delhi almost a year back, in June, when I asked how many projects are under way at Infosys. It took the team four-five weeks to assemble this data in one spreadsheet. Since then, every Saturday, I get a spreadsheet on every project that is under way.
In my first quarter, which was the second quarter for the company, I was on phone calls with customers preventing ramp-downs. So there was this particular client, where I saw there would be a $9 million ramp-down. We saw that. And I had to speak with them to see what we could do to help them. Because we saw that this could have negative impact. I would have had to do this for its effect would be on third quarter. So anybody who says the focus in not on ‘renew’, he should be fired. Because 99% of business is from ‘renew’.
So for now, what keeps you awake at night?
Well, my first concern is that when Mr. Murthy was here, he had built a company whose offerings were so differentiated that there was basically no sales requirement. Nandan (Nilekani, Murthy’s successor as CEO) used to have deep CEO level connects. So you had to say you were from Infosys, there was no competition, no fight. The traditional sales culture is not there. Sales operational excellence is not there... for the last few years, it has not been the case. Clients have opened their own shared service centres... And some companies especially, Cognizant (Technology Solutions Corp.), have world-class sales and marketing. That has created a highly competitive environment. The issue which keeps me awake at night is to get that go-to-market side back.
So what are you doing to address some of these challenges?
In the near term, we have taken basic measures. Sales team, we have brought down to five verticals which are global in nature. Sales training has happened. Delivery is not with them. For top 15 accounts, the top three in each account, we have taken responsibility: the CEO’s office. So by “we", I mean Deepak (Deepak Padaki, vice-president, strategy, and chief risk officer), Ranga (Ranganath D. Mavinakere, executive vice-president and head of strategic operations), Ritika (Ritika Suri, head of mergers and acquisitions) and me. So I basically supervise them. The primary addition we do is that I can intervene. I know the clients. So I can talk to them. With these 15, I can do in a focused way. You can connect the dots better. Being in the central place, you can connect the dots. We want to teach the teams at the top of the pyramid to get these connecting-the-dots better.
What other measures are you taking to generate more business or, say, win new clients?
We are opening new channels of business. We are not just responding to requests but being proactive, and we have already won some mega deals, influenced by design thinking, in just six weeks since we launched it. The other one we have done is with consulting. To say they worked in silos, that is putting it mildly. These consulting leaders, along with the sales leadership, will (now) have strategic engagements with clients. We have incentivized them to grow the Infosys business in a meaningful way. They have become design thinkers.
Every turnaround is scripted by a team. Do you believe you have the right team?
Absolutely. Pravin manages it from here and I can travel and meet clients. Ravi (S. Ravi Kumar, head of delivery), Ranga is for strategy. But there is incredible fixation with SAP. (Several executives of Sikka’s former employer have joined Infosys)
But 16 senior executives from SAP have joined you.
See, many of these people had already left (SAP) or were taking time off. Some of them were laid off. I did not ask a single executive to join me. They wanted to join. Also, other than Michael (Michael Reh, head of Finacle and Edgeverve), nobody runs a line of business.
Infosys said it has set a target to touch $20 billion in revenue at a 30% operating margin and $80,000 revenue per employee by 2020. The company ended the last fiscal with an operating margin of 26% and revenue per employee of $52,500. Are the targets achievable?
It should be looked as more of a guidepost. We want 10% of the business in 2020 to come from the new areas—working with start-ups, new kinds of applications and platforms. These areas would give us $2 billion in revenue by then. We would like $1.5 billion from acquisitions we make between now and then. About $16.5 billion would come from renewing the existing business, a result of design thinking, innovation culture and zero distance coming into every project. That means growing at 13%. That, I think, is very much achievable. Out of the three goals, $80,000 (revenue per employee) is easiest to achieve.
How do you see the road ahead with all these measures you have implemented?
I’m vastly more confident and comfortable about the future. Most people do not really understand what it was like (in the company) when I started. We needed to stabilize then. And now we all are excited. People are excited because they know they are involved in something great. The gravity of the situation was far worse (then)... I have found that instilling confidence in the team was the main thing then.
And now, since we mentioned bread and butter outsourcing deals, (let me tell you something about) the outcome of projects, I got my hands on 7-8 projects earlier in January, because it appealed to me. It took several months to go through those projects. Somebody wrote that I’m managing 1,000 projects, which is not possible. Some stupid human being, if he can say that he can manage 1,000 projects, he should be fired. So 7-8 projects—in each of them, there were very interesting things we could do. We identified a very basic pattern how we could improve a project. So we added three improvements in each of the seven projects and we (made a) template (of this) into a five-point thing and we rolled out to the first 1,000 project managers.
Could you walk us through on how you identify, evaluate and finally invest in a start-up? Say AirViz, the Carnegie Mellon University spun-off air quality monitoring sensor firm.
Roughly 80% of the time, you run into the companies, and they come to you 20% of the time, you see something and say, hey, that’s very interesting. In the case of AirViz, it was just a very serendipitous connecting of the dots. We had a two-day design session with a mining company in Palo Alto, and they told us that air quality in the mines is a huge problem. (It was also at the time) when Beijing was shut down for three days because of bad air quality. I met Illah (Illah R. Nourbakhsh, head of robotics at Carnegie Mellon) and I asked him what are you working on? (And then he told me that he has this air quality monitoring start-up). We were walking out already, and I said, oh, wait wait wait, tell me more about this.