Infosys's CEO Fights Off Fatigue to Remake Indian Outsourcing
(Bloomberg) -- Vishal Sikka is tired.
Infosys Ltd.’s chief executive officer, known for walking barefoot on the outsourcing firm’s grass lawns and taking thousands of selfies with employees, is starting to look like a man under pressure.
He smiles less often and cracks fewer jokes at meetings, saying things like, “It is my job to do my job.”
It’s been a tough year so far. First, a group of founders publicly accused the board of corporate governance violations and questioned hefty pay raises given to Sikka and his deputy. That ended in a truce. Then, U.S. President Donald Trump’s administration promised a clampdown on the work visas used by Infosys to service U.S. customers, triggering a 10 percent drop in the stock. In response to the criticism, Infosys unveiled plans on Tuesday to hire 10,000 American employees in the next two years.
“The whole thing has become quite complicated,” Sikka said in a recent interview. Asked about his haggard appearance, the 49-year-old said he didn’t sleep the previous night because he was thinking about the changes overtaking the industry.
Sikka, a former SAP SE executive, took the helm of India’s No. 2 technology services provider almost three years ago with a mandate to remake the company’s business model. Instead of charging customers such as Goldman Sachs Group Inc. and Toshiba Corp. for the hours spent by technicians and engineers to build and manage corporate computer systems, Infosys set out to build automated software and tools that would detect problems and solve them with less human intervention, freeing up consultants to provide more specialized and proactive services.
“Vishal Sikka is a great technologist and has all the right ideas,” said Ashutosh Sharma, who heads Forrester Research in India. “But he inherited a firm with a culture and history that doesn’t lend itself to his vision.’’
Sikka, the Bangalore-based company’s first non-founder CEO, declined to talk about the skirmishes with the founders, who also questioned large severance packages given to two departing executives. Chairman R. Seshasayee backed Sikka, and the public spat was put on hold in February when co-founder Narayana Murthy, who previously served as CEO, said it was time to stop and focus on the company’s business. Sikka said his pay is “fully aligned” with shareholders’ interests.
The steps that Infosys announced to hire more people in the U.S. will also help fend off pressure from the current U.S. administration. The company plans to open four research hubs in the country focused on cutting-edge technologies such as artificial intelligence and machine learning, with the first location opening in Indiana this year.
Infosys posted revenue of $10.2 billion for the fiscal year that ended in March, up from $7 billion five years ago. “We want to hit $20 billion in annual revenues by 2020,” Sikka reiterated when Infosys reported results this month. “Yes, it is an aspirational goal but then what is life without dreaming about a moon shot?” the CEO said. Analysts are projecting, on average, sales of $13.4 billion in three years, according to data compiled by Bloomberg.
To reach his goals, Sikka is spending more time with clients and scouting out opportunities across the globe. The CEO said he took 99 commercial and 17 private flights in 2016, amounting to 800-plus flying hours. Sikka blamed his fading mirth on the constant travel.
“The job travel wears you down but it is the only way to level with customers,” he said. The U.S. accounts for more than 60 percent of Infosys’s revenues, and Australia another 10 percent.
What’s harder is coming up with technology that can boost sales or cut costs. Unlike high-margin businesses such as SAP or Microsoft Corp., Infosys traditionally charges clients based on the number of staff needed for a job. Two-thirds of Infosys’ employees work on legacy, commoditized jobs like maintaining computer systems, building applications and running verification processes for retailers, automakers and oil & gas companies.
Yet wage costs are rising in India and contracts are under tremendous margin pressure, making it harder for Sikka to free up capital to develop new technologies. “In the IT services industry, the script is not so straightforward,” Sikka said.
For too long, Infosys’ employees worked only to client specs and lack agility, Sikka said. To fix this, all college hires are trained in three computing languages instead of one. For existing workers, there are intensive training programs. Almost 135,000 people have been trained to develop automated solution. Online tutors are schooling 90,000 employees on artificial intelligence and other advanced computing tools.
One of Sikka’s initiatives is the Zero Distance program, which pushes employees to come up with ways to help solve customers’ complex problems and needs. In one example, a team working on a big bank’s loan processing application cut the time to six weeks from eight. A new AI platform has amassed 50 customers, which in one case helped a Singaporean bank reduce its reliance on a small army of lawyers to vet agreements.
“We are approaching a time when any problem that can be mechanically articulated can be automated,” Sikka said. “I want us to become a company of 200,000 innovators where entrepreneurship, risk-taking and agility are ingrained in everyone.”
Sikka admits that he’s running out of time to make all of this happen, even though his tenure was recently extended until 2021 despite the spat with the founders.
“This will be the last year when we can be ahead of the curve in technology,” Sikka said. “Next year, we will be abreast. Two years from now, it will be too late.”