Salil Parekh may push Infosys up – or be brought down himself by the old guard
It was a bold step for the Infosys to bring in an outsider to head their company, particularly on a five-year contract.
Salil Parekh, the new CEO, while not a Silicon Valley product unlike predecessor Vishal Sikka, but he has the background to know how the outsourcing service industry works. It was on December 2 that the board of Infosys, India’s second-biggest service company, announced Parekh’s appointment as CEO and managing director, his term starting January 2, 2018.
U B Pravin Rao, interim CEO after Vishal Sikka resigned in August, will step down and continue as chief operating officer.
Reacting to Infosys’s hiring Parekh, Kanwal Rekhi, MD, Inventus Capital Partners, told indica, “My general sense is that founders of Infosys are [given to] looking backwards and have antibodies for outside talent.”
“Hopefully, Salil will not be second-guessed by the likes of [Infosys co-founder N R] Narayana Murthy. Infosys needs to move on in an ever-changing world and not be stuck in place,” he said, and added, “Once the company has gone public, it is not controlled by the founders. They should let go.”
Commenting on Parekh’s appointment, Narayana Murthy said he was happy and wished him good luck.
Another senior Silicon Valley venture capitalist Vish Mishra, general partner at Clearstone, said he was surprised with the 5-year agreement.
“A five-year employment agreement he has negotiated is unheard of in the tech industry,” he told indica. “I suspect Infosys board must have seen something in him to make such an offer. Let us hope he escapes the attack from the antibodies and succeeds in transforming the iconic [firm],” Mishra said, adding that Indian outsourcers were slowly adjusting to major challenges in the age of cloud and mobile computing.
“He (Parekh) sure will face challenges at Infosys as I assume he will try to steer it away from “historically more low-cost labor to a future of more investment in technology and … productivity like Vishal tried to do.”
An IIT Mumbai alumni, before accepting the Infosys offer, Parekh was with French IT services company Capgemini, where he was a member of the group executive board. Various media outlets have described him as playing a big role in acquiring iGate in 2015, and helping Capgemini expand its business in India as well.
According to Quartz Media, Capgemini grew from 300 people when Parekh joined it in 2000 to over 60,000 in 2015. He was with Ernst & Young’s consulting unit when the unit was acquired by Capgemini.
Parekh earned his master’s degree in in computer science and mechanical engineering from Cornell University, and his bachelor’s degree in aeronautical engineering from the Indian Institute of Technology, Bombay.
Another Infosys co-founder Nandan Nilekani, who was brought in as non-executive chairman after former CEO Sikka abruptly resigned, called Parekh the right person to lead the company at this transformative time in the IT industry.
Kiran Mazumdar-Shaw, chairperson of the Nomination & Remuneration Committee, said that going by Parekh’s strong track record and extensive experience, “we believe, we have the right person to lead Infosys.”
Indeed, Parekh has nearly three decades of global experience in the IT services industry. He has a strong track record of executing business turnarounds and managing very successful acquisitions.
Infosys founded in 1981, is an NYSE listed global consulting and IT services company with more than 198,000 employees and clients in 45 countries. In recent years, it has struggled in adapting to newer technologies like AI, machine learning, automation and innovation, areas Sikka had focused on.
Sikka even pushed Infosys to be part of OpenAI, a non-profit research venture into artificial intelligence started by a group of tech giants, including Elon Musk, founder of Tesla and SpaceX; Peter Thiel, co-founder of PayPal; and Reid Hoffman, co-founder of LinkedIn.
The IT company also has to deal with the problem of getting people over on H1-B visas, given the higher base salaries it is expected to give them now.