Salil Parekh's 5-yr extension bodes well for IT major Infy

On Guard

- Parekh took over as CEO when Vishal Sikka exited

- Many board members also left that time

- Infosys was facing controversy in 2018 as a prolonged rift with the promoter shareholders

- However, Nandan Nilekani as Chairman and Parekh-led team managed to bring stability

Bengaluru: Extension of Infosys' CEO Salil Parekh's term by five years puts India's second largest IT services company on a strong footing as it prepares for its next phase of growth. Experts said that this continuity would provide the Bengaluru-headquartered firm the much-needed leadership heft to navigate the global economic uncertainty effectively. They, however, said that challenges in terms of attrition and employee engagement have to be tackled effectively by the CEO in this term.

"Infosys has emerged as a bellwether in the industry as it is leading growth rate in the last four years under the leadership of Salil Parekh. The company has not only stabilized the internal operations, but also able to take many initiatives for driving growth. As he takes over the mantle for another five years, issues like attrition have to be managed. Also, more revenue from consulting business and entering into untapped geographies are likely to figure more prominently in his priorities," said Pareekh Jain, an engineering services expert and Founder of Pareekh Consulting.

Parekh took over the reins of Infosys in January 2018, when the company was facing controversy after the exit of then CEO Vishal Sikka. Many board members also exited during that period post a prolonged rift with the promoter shareholders.

However, with Nandan Nilekani as Chairman and the team led by Parekh, the company was not only able to bring in stability, but also consistently performed better than its peers.

Infosys was able to clock better revenue growth than its larger peer Tata Consultancy Services (TCS) in CAGR term during the last three fiscal years. While the IT major has entered into various joint ventures with enterprises across the world, its focus on mega and large deals with an aggressive sales team has led to a strong deal pipeline in the last three fiscal years.

The company was also able to manage the reputational risks arising from anonymous whistle-blowers during this period. With 19.7 per cent revenue growth in FY22 in constant currency term, it is closing in the gap with its larger peers.

"With Parekh at the helm, Infosys should be able to pip Cognizant in coming fiscal year. The company is likely to close the gap with TCS given the growth projections," said a source.

However, high employee attrition remains the most formidable challenge for Parekh to solve. Though attrition is an industry-wide issue, Infosys' attrition of 27.7 per cent in March quarter remained the highest among top-4 IT firms of India.

"Attrition is the biggest challenge for Parekh to overcome given the high numbers. We also have to see how he manages the next phase of growth by focusing on consulting-led growth which usually has higher margins. Also, if recession comes in the US, his approach to navigate the situation will also be keenly watched," Jain added.

As he takes over the mantle for another five years, issues like attrition have to be managed. Also, more revenue from consulting business and entering into untapped geographies are likely to figure more prominently in his priorities

- Pareekh Jain, engineering services expert and Founder of Pareekh Consulting