Investors yesterday cheered the appointment of Infosys Ltd’s new chief executive, in hopes the Indian IT services firm can move past a costly boardroom spat, though questions remain over how the new boss will navigate strained corporate ties internally.
After well over a decade with Capgemini, Salil Parekh is returning to India to head Infosys, where he is tasked with reinvigorating growth, while keeping the peace.
Parekh joins Infosys, historically a bellwether of India’s $154 billion IT services sector, as it attempts to heal following a nasty public spat between its board and founders that led to the dramatic exit of its previous CEO, Vishal Sikka, in August.
Shares in Infosys rose nearly four per cent yesterday following Parekh’s appointment as markets welcomed the board’s move to tap an industry veteran with both deep experience in leading a consulting firm and knowledge of the Indian IT model.
But investors remain concerned about how he will deal with potential strains in the relationship with the founders, which cost Infosys billions of dollars in market capitalisation earlier this year.
“The incoming CEO will have to maintain a good rapport with the founders and take care of corporate governance,” said R.K. Gupta, managing director at Taurus Asset Management, which owns shares in Infosys. “I believe both the CEO and founders will be cautious in their dealings with one another.”
Parekh joins Bengaluru-based Infosys in January from Paris-headquartered Capgemini, where he headed their core application services business in key markets like North America and the UK, and their cloud services and cloud infrastructure businesses. He also managed Sogeti, a unit of Capgemini focused on digital transformation. In its most recent quarter, Capgemini’s digital and cloud services grew 23 per cent in constant currency terms. Capgemini also reported 6.9 per cent revenue growth in North America – a market largely under Parekh’s watch and one which accounts for nearly a third of its revenues.
Infosys in comparison, saw its North American revenue grow at the pace of just 3.9 per cent over that same period.
As CEO, Parekh will have to replicate some of his successes at Capgemini while being careful not to antagonise Infosys’ founders, who own about 12 per cent of the company, but command an outsized say in its direction.
The founders, led by Narayana Murthy, the doyen of India’s IT services sector, engaged in a lengthy public feud with Sikka on issues ranging from flights on private jets, to overspending on a takeover, and on the pricey rent for his US office, to the largesse of payouts given to certain executives following their exits.
The spat culminated with the exit of both Sikka and Infosys’ then chairman R. Seshasayee in August, and the return of one of its founders, Nandan Nilekani, as chairman.