It was only over the last 10 days that there were serious murmurs about Vishal Sikka — Infosys’s rockstar CEO, as described by a company founder — hanging up his boots. But none who know N R Narayana Murthy expected an outcome any different than this.
“Mr Murthy quoting independent directors as having said Sikka ‘is not CEO material but CTO material’ suggests loss of confidence. It seems he bought into their assessment. Hitherto, there was comfort within the company’s leadership team that Mr Murthy’s battle was essentially with the current board,” said a senior Infosys executive of two decades.
Over the last six months, Sikka remained distracted with questions being raised publicly by Murthy and through anonymous letters on issues that would generally be seen as pertaining to a large company’s normal operations. “The board did back the CEO every time but it also felt necessary to indulge the promoters. Perhaps, it faltered here,” another senior management executive at Infosys said.
Sikka did not expect the criticism to abate and realized the constraints under which the board functioned. “On occasion, the board could have just bluntly asked the promoters to put their questions (on corporate governance issues, severance package, salary increases, etc) at the right forum — which is the company’s annual general meeting. But instead, the board indulged the promoters given their reputation,” said a management consultant, who did not wish to be named.
Over-hyping the transformation that Sikka was attempting, setting lofty topline goals ($20 billion by 2020), high salaries and severance packages, and infusing an “American culture,” were some of the broad issues incongruous with the founders’ style of functioning, said a consultant from an independent firm, who worked closely with the current management to smoothen its relationship with the promoters.
Indeed, Murthy sought to differentiate the Infosys of the day from its pre-2014 time on account of its slipping corporate governance standards. He had demanded a host of changes — a co-chair to the board, consulting past employees, getting those schooled in Infosys ‘values’ back in the board, among other things.
During the last three years, Sikka did bring about a different work culture, including flexible working hours. But the way he spends, the areas he wants to invest in, all have been very different from the traditional Infoscion’s mindset, said an analyst, who has joined him in roadshows abroad.
“Murthy may have cleaned his own toilet but you can’t expect Sikka to do that. On the same note, Sikka doesn’t mind hiring corporate jets, whereas Murthy will fly economy class. These cultural differences were difficult to ignore for the promoters,” the analyst adds.
These aside, a senior HR executive said, Sikka’s initiatives presented a “logical continuity” in the company’s growth path. “In the last three years, Sikka, a hands-on technology whiz kid geared up for future challenges by charting out a journey of innovation — automation, artificial intelligence, etc for the average Infoscion,” the HR executive said.
In fact, in July when Infosys released its results for the first quarter of the current financial year, Sikka and COO Praveen Rao arrived to announce the results in an autonomous golf cart. The self-driving cart was presented as a symbol of new technologies that the company had ventured into its three years under Sikka.
“We have created a program to train engineers in autonomous technology. This is a symbol that we can be at the cutting edge of technologies,’’ Sikka said that day. He also went on to say that new services in the areas of cloud computing and artificial intelligence had contributed more that half of the $2-billion revenue growth since 2015.
With Sikka’s exit, however, analysts say, Infosys also stares at the prospect of veering away from future computing technologies like robotics and AI.
“Sikka is a rare IT services company CEO with a strong computer science research and product background and he brought this thinking to Infosys Ltd. With his exit it is unlikely that the company will find another CEO in the same mould. It will probably be a person who will focus on margins and operating costs to make the company profitable,’’ a senior Infosys employee said.
“I signed up for disruption, for technological change that needs to be done, for the cultural transformation of the organization for getting the company back to profit and growth. I felt that it would be incredibly challenging and exciting. I came here to transform the company,’’ Sikka said today. “I came to do this with the power of technology given my experiences with similar transformations, my background in AI, and the structural changes that I saw happening in the IT services industry. This needed new skills, new thinking, new initiatives, and a transformation in the culture, from a cost-oriented value delivery, to entrepreneurship oriented value delivery.”
Underlining his passion for technology Sikka in his resignation letter to Infosys Ltd also mentioned a recent demonstration of AI capability where a bot built by the researchers at OpenAI defeated the world’s best players of DOTA2, a multiplayer online video game, after learning it from scratch. Sikka said the AI example was evidence that “the force to automate routine, even advanced, activities is an unstoppable and exponential one’’.
“Vishal has been such a thought leader for the industry as well as for Infosys. There are many ways in which he has made sure that Infosys is strategically relevant again and has sowed the seeds for the transformation of the company. In addition to the operational and financial performance of the company we want to thank Vishal for leading this transformation,’’ co-chairman of the Infosys board and former Microsoft India CEO Ravi Venkatesan said on Friday.
The crucial question as Venkatesan himself puts it is whether “Infosys will tranform itself faster than everybody else and position itself in a leadership role for the next generation’’ of the IT business.