Infosys Appoints Salil Parekh As CEO, Nearly Four Months After Sikka’s Resignation

Information technology bellwether Infosys Ltd. has appointed Salil S. Parekh as its new chief executive officer (CEO) and managing director, nearly four months after former chief Vishal Sikka stepped down.

Parekh has been appointed for five years and will take over on January 2, 2018, the company said in a media statement. UB Pravin Rao, who had been appointed as interim CEO, will be the company’s chief operating officer and whole time director, the statement added.

"We are delighted to have Salil joining as the CEO and MD of Infosys," said Nandan Nilekani, chairman of the company. "He has a strong track record of executing business turnarounds and managing very successful acquisitions," Nilekani added.

Parekh was previously with Capgemini and was a member of the group executive board. He joined Capgemini in 2000 following the acquisition of the consulting division of Ernst and Young.

Also Read: All You Need To Know About The Infosys Saga

The appointment is a "positive from multiple perspectives", according to R Chandrasekhar, president of NASSCOM, the I.T. trade association of the country. "He is well known in the industry so he is well rooted here," Chandrasekhar told BloombergQuint in a telephonic interaction.

Parekh has been heading application services for Capgemini globally and therefore the task ahead is something he is familiar with, Chandrasekhar added.

TV Mohandas Pai, former chief financial officer of Infosys, said that since Parekh’s background is in IT services, “this should work out better for shareholders.”

The appointment of Parekh ends a near four month-long search to lead India's second largest software services company after Sikka’s resignation following the tussle with co-founder Narayana Murthy. The latter had questioned governance standards over severance pay to former Chief Financial Officer (CFO) Rajiv Bansal and anonymous allegations of wrongdoing in the acquisition of Israeli firm Panaya during Sikka’s term. Murthy had criticised Sikka for not making the investigation reports on the Panaya acquisition public.

Sikka, in his resignation letter, had said that the "false, baseless, malicious and increasingly personal attacks" triggered his resignation. Following Sikka’s resignation, co-founder Nandan Nilekani returned to chair the company in August.

In an emailed statement after Infosys announced Parekh as the new CEO, Murthy said: “I am happy that Infosys has appointed Mr. Salil Parekh as the CEO.  My best wishes to him.”

Also Read: Nandan Nilekani Gets To Cleaning Up The Infosys Mess

The new chief will now be tasked with steering Infosys through the changes that the Indian IT industry is trying to maneuver . The company has already slashed its sales growth forecast for the current year to 6.5 percent from 7.5 percent earlier. This came amidst challenges including a threat of visa curbs in the U.S., slower client spending in verticals like banking and financial services, and increasing competition. Infosys, like others, is also trying to adapt to newer technologies like cloud computing, automation and digital services. The Infosys stock has declined 5.13 percent in 2017.

Core Strengths

Parekh's strengths include "people management, strategy, the fact that he knows application services and has handled global services" for Capgemini, said CP Gurnani, chief executive officer of Infosys' peer Tech Mahindra Ltd.

He added that it won't be a big issue for Parekh to adapt to Infosys' culture.

‘Seasoned Leader’

A “seasoned leader” like Parekh is a good choice for Infosys, said Anil Singhvi, chairman of proxy firm Ican Investment Advisors.

‘Growth Concerns Remain’

The concerns that were there during Sikka's regime still remain, said Sudin Apte, chief executive officer of Offshore Insights, who closely tracks the I.T. sector.

Apte said that Infosys needs to leapfrog with digital services and automation, while also maintaining their share in traditional services that still contribute nearly 80 percent of their revenue. He also said that confidence in clients and employees needs to be reinstated.

Parekh's job would be to "get growth back, ideally faster than the industry" is growing, Apte said. He added that it is “very crucial” that the new chief gels nicely with the co-founders as it played a big role in Sikka's exit.

‘Leap Of Faith’

It is a "big leap of faith" for Infosys to appoint someone who wasn't running a large corporation on his own, said Ajay Srivastava, CEO of Dimensions Consulting.

Srivastava added that he expects Nandan Nilekani to stay on for a longer time in a more involved role as that may be necessary with the new incoming chief.

He also said that Parekh has relevant experience in areas where Infosys is lagging its peers like HCL Tech and Tata Consultancy Services.

Watch BloombergQuint’s full coverage here.