Vishal Sikka’s exit and Infosys’ future

Infosys VishalSikka

Sikka could have helped Infosys log into a new future, but that required a DNA change and he was denied the access

Vishal Sikka joined Infosys in 2014 as the first non-founder CEO of the IT services company. This was a period when India’s big-ticket IT players were starting to look for ways to innovate. And they had all the reasons to do so. Automation was becoming a real threat across the world, impacting IT/ITeS jobs which had in fact powered the Indian IT boom. Infosys, Wipro, TCS and CTS were feeling the heat. Jobs and opportunities in the segment were dwindling. Analysts predicted that shedding the “services” mindset and bringing large scale innovation should be the way forward. Rising up to challenges, Infosys roped in Sikka who was SAP’s first CTO, to steer its ship.

For those who have been following Sikka’s tenure at SAP, he comes across as a technology guy. SAP HANA, an in-memory relational database which was instrumental in keeping SAP’s dominance in the enterprise market in tact, was architected and delivered under Sikka’s leadership. When Infosys brought in Sikka it was expected that the company’s technology roadmap would see drastic changes. Finacle, a banking software, was the most significant product from the Infosys stable till Sikka entered the scene.

Sikka years

Year 2014 saw Infosys create a wholly-owned subsidiary EdgeVerve Systems to focus on innovation and product development. Sikka was appointed as the first chairman of EdgeVerve. In 2015, the company moved Finacle, one of its long-standing products under EdgeVerve Systems. Infosys also launched a couple of key products in the big data analytics space and Artificial Intelligence — two of software industry’s growing segments. Infosys Intelligence Platform, a product suite in the big data and analytics space and NIA a next generation artificial intelligence platform both made their debut in 2015.

In 2015, Infosys acquired the Israeli firm Panaya which was a software as a service provider, another product company in the cloud space. They also acquired Skava, an eCommerce platform for cloud providers. All these were indicating towards greater emphasis on product development in the cloud space also targeting big data, analytics and artificial intelligence.

Sikka who foresaw SAP’s transition into cloud had a product innovation based technology vision for Infosys as well. The company’s product portfolios and acquisitions after 2014 signal that strategy. But for an Indian company like Infosys whose major strength was services this was too big a change. Transitioning from a service-based organization that provides tailor-made software to a product- based company which boasts its technical know-how and controls the customer demand is a tough one. It is a DNA change, as they say in the industry. Even for Sikka, it would have been a tough one considering where Infosys business interest stood when he joined the company.

A tough task

Indian IT majors have a tough task at hand. Their existing strength in the service industry will not serve them for the future. IBM, HP and Dell, they all have their own services division set up in India. These MNC companies are able to give better salaries than their Indian counterparts and attract better talent. They might also prefer their own service divisions for their outsourced work, cutting into the work share that traditionally Indian companies held. One potential strategy for them, which Infosys tried by hiring Sikka, is to venture into new areas such as product development in emerging areas like artificial intelligence , cloud computing and big data analytics. Building products from scratch in these domains is difficult given the skill and time required. Smart acquisitions might help the purpose as was done by Infosys under Sikka’s leadership.

In software industry, companies have to continuously adapt to the changing technological landscape to stay relevant. The failure of Microsoft in catching up with Google and Apple in the mobile computing landscape, and to Amazon in the cloud computing scenario, are good examples. (Microsoft is trying to make a comeback with Azure, but only time will tell how successful they will be). It was imperative that Infosys and others took some bold steps and moved out of their comfort zones to see that their businesses continued to flourish.

The beginning of 2017 also saw a large number of corporate governance issues surface at Infosys. Infosys founder NR Narayana Murthy had raised questions over the salary of its top executives. There were questions and concerns about the pay hike and severance packages of some executives as well. The $200-million acquisition of Panaya software was at the center of the controversies. There were allegations of over valuation, too. Anonymous complaints on the acquisition alleging malpractice were received by market regulators SEBI in India and SEC in the US. After Sikka’s arrival, Infosys saw a good number of their top executives leaving the firm, the latest being Ritika Suri, the executive VP who was part of the Panaya deal.

It would not be wise to say that all the steps taken by Infosys in transforming itself into a player in the cloud/big data space will go bust with the exit of Sikka. But Sikka had the appropriate credentials to pull this off, though he needed the system also to support him. Whatever be his disagreements with the powers that be at Infosys, his exit could hurt Infy in its journey up the technology ladder.

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