By BQ Desk
Salil Parekh took charge as managing director and chief executive officer of Infosys Ltd. today amid expectations that he will steer India’s second-largest software services provider towards higher growth.
The Infosys board selected Parekh to lead the company for the next five years nearly four months after former CEO Vishal Sikka stepped down, capping months of hostilities between co-Founder NR Narayana Murthy and the earlier board led by R Seshasayee.
Shares of Infosys have gained about 8 percent since Parekh’s selection. He enters during a challenging environment, including a threat of visa curbs in the U.S., slower client spending in legacy verticals like banking and financial services, and increasing competition. Infosys has already slashed its sales growth forecast for the current financial year to 6.5 percent from 7.5 percent earlier. Like other peers, it’s also trying to adapt to newer technologies like cloud computing, automation and digital services.
Nandan Nilekani, former CEO and co-founder who returned to lead the company as chairman to quell investor concerns, said Parekh is the right person to lead Infosys. “He has a strong track record of executing business turnarounds and managing very successful acquisitions,” Nilekani said after Parekh’s appointment.
Parekh, previously with Capgemini, was a member of its group executive board. He joined Capgemini in 2000 after the company acquired the consulting division of Ernst and Young. It was partly under Parekh’s leadership that Capgemini was able to rapidly expand India operations for offshore clients, according to JP Morgan. After IBM and Accenture, Capgemini has more employees in India than any other global tech firm.
His resume suggests that he ticks several boxes for Infosys. –JPMorgan
Parekh led Capgemini’s financial services vertical in the U.S., Europe and Asia. This “extensive experience” would bode well for Infosys as one-third of its revenue still comes from the financial verticals, said Goldman Sachs in a prior note.
The concerns for Infosys that were there during Sikka’s regime still remain, according to Sudin Apte, CEO of Offshore Insights, who also tracks the IT sector. “Irrespective of the person who is in the chair, the growth needs to comeback and stability in the organisation is still required,” Apte had told BloombergQuint earlier.
The company will need to leapfrog with digital services and automation, while maintaining their share in traditional verticals which contribute nearly 80 percent of its revenue. Parekh will also need to reinstate confidence in clients and employees after the boardroom tussle between Sikka and Murthy.
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