3 min read.Updated: 10 Sep 2018, 10:05 AM ISTVarun Sood
Salil Parekh's approach since taking over as CEO in January is distinct from that of former CEO Vishal Sikka, who in his first nine months hired 14 executives from SAP AG
New Delhi: Infosys Ltd’s chief executive officer Salil Parekh appears mindful of the cultural risks associated with hiring senior leaders from outside the company, manifested in the reluctance of India’s second-largest information technology outsourcing (IT) company to hire such executives. Significantly, Parekh’s approach since taking over as CEO in January is distinct from that of former CEO Vishal Sikka, who in his first nine months hired 14 executives from SAP AG, the German business software provider. Sikka himself was board member at SAP before being hired to steer Infosys in 2014.
Parekh’s cautious approach of promoting executives within the company to take up leadership roles rather than hiring from outside also helps quell any discontent and debate over “us versus them", a narrative for which Sikka came under criticism from both within and outside Infosys.
“(C)ontrolled outside hiring minimizes the risk of a culture hijack and creation of us vs them camps, that can result from a sudden influx from senior leaders from outside," JP Morgan Chase and Co. analyst Viju George wrote in a note to investors on 2 September. George wrote the note after meeting Parekh last month when Infosys looked to assuage investor concerns on a string of departures from the top management.
“Investors have noted and asked why there have been hardly any hiring announcement(s) by Infosys of senior leaders from outside firms. Typically, a CEO, who has taken charge, may look to fill critical gaps by hiring relevant senior talent from outside. We saw a fair bit of this early into Dr Vishal Sikka’s tenure with a flow of high-profile recruitment into Infosys from SAP. Mr Parekh has been conscious to resist the temptation to hire too many too soon from outside. The reason is twofold: (a) it is preferable to fill/elevate from within, if the relevant experience is available to offer a career path to deserving professionals, which in turn creates opportunities for advancement for other lower below and (b) controlled outside hiring minimizes the risk of a culture hijack and creation of us vs them camps so to speak that can result from a sudden influx from senior leaders from outside," wrote George.
“At Infosys, we have always focused on nurturing talent and leadership within the organisation," said a spokeswoman for the company. “On occasion, if a certain skillset is not available within the organization, we hire externally as required."
To be sure, Parekh has said that he will look at hiring talent from outside the company in areas in which Infosys does not have required skill sets. This will be in areas like account management, large deals and digital teams and none of the leaders will be part of core leadership team, according to an executive familiar with the development. Still, Parekh’s leadership style is more conservative than that of Abidali Neemuchwala who since taking over as chief operating officer at Wipro Ltd in 2015 got eight former colleagues from Tata Consultancy Services Ltd (TCS). Neemuchwala himself was at TCS before taking up the role of Wipro chief operating officer and subsequently becoming CEO in 2016. However, unlike at Infosys, where many former SAP executives joined at the rank of senior vice-president, Neemuchwala got these former TCS executives to join Wipro at lower levels.
Still, a few observers feel IT services companies, including TCS, Infosys and Wipro, need to shun this insular approach of not hiring from outside the company.
“The board of Infosys should look at making the company truly a global firm. This can be done by having local leaders in market-facing geographies like the US, UK, Europe, who are empowered to make decisions in those geographies. These executives should be brought into the leadership position. It will send a very, very powerful message to the market. Remember, signalling is an extremely important thing for these companies and I don’t think Indian IT firms, including Infosys, recognize this," said Siddharth Pai, who has personally led over $20 billion in complex, first-of-a-kind outsourcing deals.
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