Its no more honeymoon period for 'disappointed' Infosys CEO

Vishal-Sikka-CEO-Infosys CEO of Infosys Technologies Ltd Vishal Sikka | AFP

With Infosys declaring a consolidated net profit of $511 million for the June 2016 quarter—a 4.1 per cent decline from $533 million in the March 2016 quarter—besides the reshuffling and exiting of people at the senior management level, the honeymoon period of CEO Vishal Sikka appears to have come to an end.

The company also revised its full year revenue guidance to a disappointing 10.5-12 per cent from 11.5-13.5 per cent earlier. In the wake of this, Sikka had written a letter to the employees, expressing his dissatisfaction. "I am disappointed. Disappointed that our revenue performance was not what we could have delivered, but even more so, that this overshadowed the many strong strides we made on executing our strategy," he wrote.

Many experts and analysts with whom THE WEEK spoke feel that the reshuffling and the letter to the employees seems to be a panic step which could have been otherwise a wait and watch policy.

“Sikka has behaved in a typical American style as Americans do this after any disappointing quarter or the poor performance of the company. He stays in the US and behaves like an American. Probably if things go this way and do not improve over the next few quarters he may himself quit. In a company of more than 1,50,000 employees there can be a panic situation and many may look out for other openings which is already happening at the managerial level,” said Kris Lakshmikanth the CEO and founder of Head Hunters India, a recruitment firm that specialises in senior managerial placements.

Experts believe that many of the steps which Sikka after assuming the role of the CEO haven't worked in his favour.

“The new platform Mana, which was the brainchild of Sikka, did not take off as expected. Similarly the company’s banking product, Finacle, did not get much business as it needs upgradation...and needs to meet the current requirements of many new age banks. However, I feel that in a company of the size of Infosys there would be more than 10,000 managers, hundreds of vice presidents etc. A stern letter and a reshuffling move can demotivate them and they will start looking out. The attrition rates are expected to go up across Infosys in the near future,” Lakshmikanth pointed out.

One of the high level exits was in the form of Anup Uppadhayay, an Infosys veteran who had joined the company in 1993. He quit the company a day before the quarterly results. Uppadhayay was the vice president and global head of strategic sales programmes and used to head Infosys BPO earlier. Interestingly, Infosys BPO also had a flat growth in the last quarter.

Samson David, who was heading the Artificial Intelligence platform Mana, also quit a day before the results. Sikka appointed Deepak Padaki to handle mergers and acquisitions while Ritika Suri has been given the additional responsibility to manage large deals in addition to her current role as head of the Infosys Innovation Fund. The company also appointed Narasimha Rao Manepalli to head Mana.

“The demand itself has been sluggish in the IT market and Sikka wanted to derive more revenues from high end and innovative services which did not happen. Ever since Sikka took charge, many new product acquisitions and innovations were being worked on by the company which did not contribute to the expected growth of the company. I feel that his reaction is very pre-mature and things will not change in the company all of a sudden...He should have waited for some time before bringing in changes. The Indian IT industry has matured and is now behaving like the cement industry in the country where future growth is expected to be sluggish with a dip in demand,” Alok Shende of Mumbai-based Ascentius Consulting pointed out.

Many experts feel that traditional companies such as TCS do not press the panic button but wait before taking any harsh steps as they know things won’t change overnight. “The quick reaction could be to regain the share holders confidence as they may feel that the company is taking steps to bring back growth but all this will be at the cost of bringing in a sense of uneasiness amongst such a huge employee force,” said Lakshmikanth.

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Topics : #Infosys

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