Infosys Chairman Nandan Nilekani will oversee a smoother transition of running the country’s second-largest software exporter once CEO-designate Salil S Parekh takes over in January, learning from the culture clash encountered during former chief executive officer Vishal Sikka’s tenure.
Nilekani, who returned to Infosys after Sikka’s exit had earlier indicated that the centre of gravity would shift to Bengaluru, where the company built its business over the last three decades.
“In this particular case, there is going to be much more stable transition with Nandan. He is co-founder of the business, he understands the business extremely well,” said Kiran Mazumdar-Shaw, chairman and managing director of Biocon, who also heads the Nomination and Remuneration Committee at Infosys as a board member. “He can guide in this transition phase very well.”
Co-founder N R Narayana Murthy and other founders had handed over reins to an independent board and Sikka, who was brought in as its first non-founder, in August 2014.
While the initial months were smooth, the absence of continuity of the founders at the board level saw a culture clash. Sikka, who has a background in building products, brought in his own team, and his American style of functioning ruffled feathers with long-term employees of Infosys based in India.
Sikka’s sacking of Rajiv Bansal, a former chief financial officer, over the Panaya acquisition, without involving the board was the last straw that saw Murthy question the firm over corporate governance. The public spat also saw its chairman R Seshasayee quit after Sikka.
Among the attributes Nilekani and Mazumdar-Shaw had tasked the executive search firm Egon Zehnder was a need for an executive who has built and led large offshore teams in India. The team was also considering getting back former Infosys executives for the role.
“We had a large canvas of candidates to start with. We were looking at the experience of the person, the understanding of our (IT services) sector, the change they brought in the organisation, and who have driven growth,” Mazumdar-Shaw said. “We have evaluated people with all these kind of attributes. Obviously, Salil came on top of that list.”
Parekh, who will be based in Bengaluru, was also chosen for his understanding of the work culture in India, an attribute essential since three out of four employees are located here. Parekh, a grown-from-the-ranks executive, built the offshore delivery capability at Capgemini from a team of 800 to over 80,000 people. The choice of soft-spoken Parekh, who has a eye for detail, has also got the blessing of Murthy.
“Parekh is very capable hand but has never been a CEO of public traded large firm. That was also the issue with Sikka. Both Infosys and Sikka underplayed the issue of change management,” said Sanchit Vir Gogia, founder and CEO of Greyhound Research. “Hopefully, Parekh will have the cover of Nilekani. That makes a huge difference.”