A CEO change, inevitable as it is, is always fraught with challenges, and Infosys’s decision to entrust Salil Satish Parekh as the chief executive will put to test the leadership skills of the former executive at the French information technology (IT) firm Capgemini.
Infosys named Parekh as the company’s next CEO on Saturday.
Parekh, 53, who takes over as the boss on 2 January for a period of five years, will have to deal with two immediate challenges in his first six-months: Firstly, Infosys’s ability to retain its senior executives from an already depleted senior management team and finally, to see that business continues uninterrupted.
For this reason, many believe that both Parekh and Infosys non-executive chairman Nandan Nilekani, who is expected to mentor the CEO for at least a year, could look at the playbook of Mumbai-based Tata Consultancy Services Ltd, to see if both Nilekani and Parekh could replicate the success of Natarajan Chandrasekaran and Rajesh Gopinathan.
Eight months after TCS elevated chief financial officer Rajesh Gopinathan to the rank of CEO, India’s largest IT services firm has retained all its senior executives even as business continues uninterrupted.
Gopinathan replaced Chandrasekaran, who took over as chairman of parent Tata Sons Ltd in February.
Gopinathan and Chandrasekaran’s approach has been simple: Give independence to its senior leaders and respect the team.
Parekh’s predecessor, Vishal Sikka, failed to build a stable senior management team as 10 executives of the rank of executive vice-president (EVP) and above quit the company in his three-year stint.
A churn in senior management ranks is one reason behind Infosys’s growth fizzling out during the past 12 months. Already, Infosys has cut its revenue outlook to at-best 6.5% in constant currency terms, as against 8.5% growth outlined at the start of the financial year.
Infosys cutting its growth outlook also offers Parekh time to improve the company’s execution and put the company back on a faster growth track.
A few analysts believe Parekh will be careful in bringing a number of his trusted lieutenants from outside to Infosys.
“We’ll see a measured approach," said Ray Wang, founder of Constellation Research, a technology research and advisory firm. “Infosys is a conservative culture and Salil will adapt as needed and make the case if need be. Infosys in many cases will need to augment its talent for digital skills, AI capabilities, and also design skills. That cannot be organically grown in time for client requirements," said Wang, who has worked in the past with Parekh both at Ernst and Young (now EY), the consultant, and Capgemini.
“It is to Rajesh’s and Chandra’s credit that they have managed the transition successfully until now. So, Salil, too, could work with Nandan to see at least the company can have stability both from people perspective and from business side," said a Mumbai-based analyst at a foreign brokerage on the condition of anonymity.
Agreed, Infosys has a difficult task as unlike Gopinathan, Parekh is an outsider and Nilekani, too, joined the company after a couple of years. Since at least four Infosys executives, including Mohit Joshi, head of largest industry segment banking and financial services, were considered by the board for the top job, it is certain to cause some heartburn among executives who missed out from getting it.
Parekh, who is currently based in Mumbai, will relocate to Bengaluru, where Infosys is based, which, according to multiple executives is a good start by Infosys. Again, hearteningly for investors, Parekh is considered to be a people’s manager and an understated leader, who believes in getting the job done, without looking for personal adulation.
Parekh’s personality should help Infosys even though he could look at Gopinathan’s approach to leadership.
“I don’t think I need to stand up and send a message to others in the company that I am the CEO. You need to understand your own teams and you need to respect them… It is this mutual respect that is the key to get extended teams to work together," Gopinathan said in an interview last month.