Vishal Sikka, New CEO Of Infosys

8/12/2019 Vishal Sikka, New CEO Of Infosys

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Infosys and thechallenges faced by

their new CEO VishalSikkaPrepared & Presented by,

Isabat Rizvi,Shakeel Qureshi,Shamail Ahmad


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InfosysInfosys was co-founded in 1981 by N. R. Narayana Murthy,Nandan Nilekani, N. S. Raghavan, S. Gopalakrishnan,S. D. Shibulal.

Its an Indian multinational that provides business consulting,information technology, software engineering andoutsourcing services.

It is headquartered in Bengaluru, Karnataka.

Infosys is the third-largest India-based IT services company by 2014revenues, and the fifth largest employer of H-1B visa professionals in theUnited States in FY 2013.

On 31 March 2014, its market capitalisation was INR 188,510 crores($31.11 billion), making it India's fifth largest publicly traded company


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List of CEOs Name Period

N. R. Narayana Murthy 1981 to March 2002

Nandan Nilekani March 2002 to April 2007

S Gopalakrishnan April 2007 to August 2011

S D Shibulal August 2011 till July 2014

Vishal Sikka August 2014 (designate)
http://en.wikipedia.org/wiki/N._R._Narayana_Murthyhttp://en.wikipedia.org/wiki/Nandan_Nilekanihttp://en.wikipedia.org/wiki/S_Gopalakrishnanhttp://en.wikipedia.org/wiki/S_D_Shibulalhttp://en.wikipedia.org/wiki/Vishal_Sikkahttp://en.wikipedia.org/wiki/Vishal_Sikkahttp://en.wikipedia.org/wiki/S_D_Shibulalhttp://en.wikipedia.org/wiki/S_Gopalakrishnanhttp://en.wikipedia.org/wiki/Nandan_Nilekanihttp://en.wikipedia.org/wiki/N._R._Narayana_Murthy


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Why was there a need to introduce anew CEO

Mr Murthy had returned from retirement in June last year to lead the company.His return, with his son Rohan as his executive assistant, triggered uncertainty atthe top and dimmed the company's status.

Infosys has been losing market shares to its rivals Tata Consultancy Services andCognizant Technology Solutions over the past few years. Infosys was once a starperformer in India's more than $100 billion outsourcing sector, but theuncertainty at the top and its shrinking market share dimmed its status as the

employer of choice for young IT workers, with staff leaving at an unprecedentedpace.

Analysts had said the company would benefit from swiftly appointing a new CEO.


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Why Vishal Sikka was the best bet forInfosys

Infosys has brought in an outsider and a non-founder to lead the company.

He is one of the world's most respected technology practitioners.

By appointing Vishal Sikka,analysts believe the Bangalore-based company issignalling that it wants to be at the high table of high technology.

Sikka,emphasised several times that he is 'looking forward to learning', setting thetone for his interactions with the company's more than 1.5 lakh staff, particularlythe senior management where there have been several high-profile exits in thelast year.


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Vishal Sikka,the new CEO of InfosysWe take a look at Vishal Sikka's journey, his educational background and years at SAP.

The son of an Indian Railways officer, Vishal Sikka completed his schooling at theRosary High School in Vadodara, Sikka earned a BS in Computer Science from theSyracuse University in New York and completed his doctoral programme at Stanford in1996.

After Stanford, Sikka launched a technology firm, iBrain, along with his brother, andlater founded Bodha, a company that helps e-commerce systems connect with otherapplications.

He has worked with German business software maker SAP in developing its flagshipproduct, Hana,short for " High-Performance Analytic Appliance which helps firms analyze large amounts of data quickly and bring it to market.

SAP "System Application & Prod ucts" is a German multinational software corporationthat makes enterprise software to manage business operations and customerrelations.SAP is one of the largest software companies in the world.

He quit SAP AG in May this year.
http://en.wikipedia.org/wiki/Enterprise_softwarehttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Softwarehttp://en.wikipedia.org/wiki/Enterprise_softwarehttp://en.wikipedia.org/wiki/List_of_the_largest_software_companieshttp://en.wikipedia.org/wiki/List_of_the_largest_software_companieshttp://en.wikipedia.org/wiki/Enterprise_softwarehttp://en.wikipedia.org/wiki/Softwarehttp://en.wikipedia.org/wiki/Multinational_corporation


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Vishal Sikka Faces Many Challenges asNew Infosys CEO

As Infosys has faced uncertainty previously in its revenue growth, the company nowexpects Vishal Sikka to recover losses.

In order to recover Infosys losses, the key areas that Vishal Sikka might focus on, are asfollows:

Improvisation of work environment and Employee morale

Infosys employs around 1.5 lakh employees. But in spite of a huge work force, thecompany faced uncertainty. Later, Attrition at Infosys rose to 18.7 per cent in the Marchquarter from 16.3 per cent in the December quarter.

Over the last 12 months, Infosys has lost several board members and some client-facingmanagers. The company's global sales head, head of US sales, BPO sales head, India headas well as one of the two presidents have quit Infosys over the last 12 months.


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Attrition: (refer to the gradual reduction of the size ofa workforce )

A look at the graphic will help open gauge the gravity ofthe problem. In 2009- 10, the company s attrition ratewas just 13 per cent. Five years later, it stands at 18.7per cent. Meanwhile, for its peer TCS the rate hasremained more or less stable over the same period 11.8 per cent to 11.3 per cent. It also should be noted

that the higher attrition at Infosys during the lastfinancial year was despite the fact that the companyhiked employees' salaries twice.

Taking into consideration the employee morale, VishalSikka might be expected to introduce more schemes foremployees, better employee engagement towardsInfosys profits in future.

Attrition rates for Infosys andTCS


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Need to improve revenue growth:

According to its official reports, Infosys margins grew up by 200 basis points,as it started winning large outsourcing deals. But, the revenue growth ofInfosys still lags behind. Infosys expects to grow at 9 per cent in this fiscalyear.

"While deal wins improved year-on-year, the run-rate still lags that of HCLTech, which won over $4 billion worth of large deal wins in the past fourquarters versus $2.25 billion at Infosys,"

In 2013, Narayana Murthy had outlined his three-year strategy of turningInfosys into the most desirable company but unfortunately couldn t fulfil theall around targets of the company. As Vishal Sikka is a well known name inSAP, he might nail it down by using his contacts for Infosys advantage .

Besides, Infosys is over-dependent on North America for revenues, below-parpresence and acceptance in key growth market of continental Europe will bea major challenge for Dr Sikka.


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Revenue growth: A sticky area for Infosys.The following graphic shows how thecompany s revenue growth has beencompared with its peers. In the post resultsstatement, while Infosys was cautious

about revenue growth outlook for the nextyear, TCS looked more confident.Infosys Management opined that theglobal economic environment has improvedbut due to few project ramp downs as wellas pressure in discretionary spending, thecompany expects overall client budgets to

be flat from last year and hence expects aslow start in FY15, MSFL said in a researchnote recently.Sikka, for sure, has no magic wand, buthe will definitely have to pull up hissocks.
http://stat2.firstbiz.co/wp-content/uploads/2014/06/graphfinal.jpg


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Margins: As the graphic shows, this has been a bigworry for the company. According to HDFCSecurities, Infosys EBITDA margin, a keyprofitability metrics, stood at 33.7 percent inthird quarter of 2012-13, which fell to a low of

26.1 percent in the second quarter of 2013-14,before improving to 28.3 percent in January-March. The moderate improvement has comeduring the second stint of NR Narayana Murthy.

However, growth trajectory remained volatilewith company slipping behind peers in 4Q FY14 ,the brokerage has noted. As per the dataprovided by the brokerage, the company s EBITmargin has contracted over the last three yearsfrom 29 percent to 24.5 percent in FY14.

In its bid to improve the margin, the company isnow focussing on application development andmaintenance, infrastructure managementservices (IMS) and pricing.


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Vishal Sikka will need to invest smartly for Infosys 'cloud ready' technology

Even though Vishal Sikka led all products business at SAP, Infosys can be achallenge for him as it is predominantly a services company. In an investorconference, Vishal Sikka claimed that, that the distinction between productsand services has become blurred. Large machines are delivered as servicesnowadays.To me, the distinction between software-led services and product isnot that much, he said.

Investing smartly and bringing in new innovative technology to an ITdevelopment company might increase the expectation for Infosys success infuture.


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Dr Sikka's background may be a handicap : At SAP, Dr Sikka led all productsbusiness, but Infosys is predominantly a services company. Deutsche Bank saysit is concerned about Dr Sikka's ability to run a services company. "This couldalso have implications on his view of costs and hence margins," the investment

bank said.However, Dr Sikka maintained that the distinction between products andservices has become blurred. "Large machines are delivered as servicesnowadays... To me, the distinction between software-led services and productis not that much," he said.


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Conclusions !

Analysts and company observers are still cautious for various reasons. For one,Sikka comes from a products background, while Infosys is a services company.Given the fact that his experience was with a global major, he will have to adjustto the work culture of an Indian company.

Sikka s appointment is unlikely to set things right. Analysts are, however,predicting more exits.


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Thank You !!!

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Vishal Sikka, New CEO Of Infosys