I have never found much value in reports and analysis which follow the fact: analysts and most of the 24x7 financial press unfortunately bombard us with the current hype as fed by managements and “pundits" catering to popular media. It is this thinking which prevented me from being overtly impressed by the frenzy following Vishal Sikka’s induction as CEO in 2014 and Infosys Ltd’s “turnaround" thereafter. My articles of 12 October 2015 and 15 July 2016 in the public domain, including these columns, were a reflection of this view.

It is generally productive to use the benefit of hindsight to gauge the quality of the insight, or otherwise, of past pronouncements made in real time. And, whilst I would not like to do so for the many expert analyst reports from brokerages and the press, I am taking this opportunity to revisit the three postulates from the above two articles written by me, and then form an opinion on the current state of play.

The primary points I had alluded to were in the areas of creating too much hype around an hitherto untested individual making over-commitments to the markets and prematurely playing to the gallery without fully allowing the complexities of an intricate turnaround to play out, basic management practices and style in a given cultural context, and, finally, the board composition at Infosys affecting certain key areas of governance. At no point did I underestimate the enormity of the challenge facing the IT industry in general, and Infosys in particular post the singularly spectacular debacle during Shibu Lal’s tenure. As I had forecasted on 15 July, 2016, immediately post the first quarter results with respect to the downwards revision in guidance, Infosys has, once again, revised its guidance sharply downwards post second-quarter results last weekend.

The reasons why something so abundantly clear to a rank outsider like me was not obvious to the entire management of Infosys in the first quarter is hard to fathom: but I am glad that this time they have provided a guidance which will surely be met, though I must say Sikka has swerved to the other extreme. But as I have written before, the premium valuations of Infosys, and its attendant credibility in the bourses, was based on N.R. Narayana Murthy’s carefully crafted strategy of under promising and over delivering and this return to its basic character would be welcomed by all. Of course, no one should take the $20 billion revenue goal, now being termed an “aspirational" target, seriously for this purpose of estimating forward valuations.

Secondly, for the first time, I have heard Sikka lay out the difficulties without the usual bluster, and it is this grudging attempt at humility which I believe will be the turning point for Infosys. I particularly liked the focus he has demonstrated on execution and it was apparent in the results of a difficult quarter. The rejig into many smaller business units with profit and loss responsibility is consistent with the theme of driving a clinical execution focus down the organisation. The most refreshing part was that he sees the challenges posed by SaaS and cloud as opportunities for upgrading legacy IT systems over the next many years and not as a death knell for the IT industry which, prematurely in my view, is the articulated position by many observers.

If Infosys is confident of using this disruption to its advantage over the next decade, it would be a huge positive comment on the Indian IT industry in terms of its capability to adapt, reorient, and re-skill its huge workforce without causing extensive damage to its existing businesses. His focus on reorienting Lodestone from a package systems and program implementation type of consulting organization to one providing leadership in emerging technologies like AI, Digital and Cloud services (Skava, Mana, Edge in Infosys parlance) and, thus, being the evangelists for Infosys’ range of service offerings is just the right strategy though with its significant challenges so far. Leading this strategic transformation to an automation and innovation driven company is the leadership challenge Sikka has undertaken and will indeed be a case study if successful. It would have made my iconic professor and mentor, the late Sumantra Ghoshal of Harvard and London Business School very proud indeed.

The third issue I had raised was with regard to the board which, though consisting of many distinguished members in their respective fields, had no hard core technology veteran to challenge, and guide, Sikka.

This has now been quietly addressed with the induction of D.N. Prahlad as an independent director. Interestingly, apart from being an ex Infosys employee and a technology expert, he is related to Murthy—nuances of which will not be lost on any corporate observer. Along with Ravi Venkatesan, the board will now be well positioned to guide the CEO on technology as he leads this difficult transition. If Nandan Nilekani too agrees to join the board, it would be an unbeatable combination.

Perhaps for the first time since Sikka took over more than 2 years ago, I am turning positive on the path forward for Infosys. As I have said before, Infosys needs a leadership style honed in the basics to succeed through this difficult period where navigating the rapid rate of change is the main challenge.

The recent results season, the management commentary and subtle change I perceive in Sikka’s outlook make me hopeful that Infosys may have finally turned the corner.

Prabal Basu Roy is a Sloan Fellow from the London Business School and a Chartered Accountant. The writer presently manages a PE fund and has formerly been a director and group CFO in various companies.

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