Infosys Americas head Sandeep Dadlani quits in setback for CEO Vishal Sikka

Karmesh Vaswani and Nitesh Banga to take up the roles of Sandeep Dadlani

Sandeep Dadlani, the head of Americas and global head of manufacturing and retail for Infosys, has resigned, in a setback to Chief Executive Officer (CEO) Vishal Sikka.

Dadlani, among the four presidents at Infosys, was managing nearly a third of the $10.2 billion revenue for India's second largest software exporter. He joined Infosys in 2001. 

While Dadlani, who resigned on Thursday, did not disclose where he is headed, on his LinkedIn profile he wrote: "Next up: An out-of-the world assignment! Stay tuned." 

Infosys has named two long standing executives — Karmesh Vaswani as the global head of retail, CPG and logistics (RCL) and Nitesh Banga as the global head of manufacturing — to take up the roles of Dadlani. It also announced appointment of Inderpreet Sawhney, a former Wipro executive as group general counsel.

“His (Dadlani) exit is clearly a setback given his strategic portfolio holding and the current headwinds in the IT sector,” said Sandip Agarwal and Pranav Kshatriya of Edelweiss Research in a note.

The global retail industry is undergoing a disruption due to online competition from the likes of Amazon and large US retailers are struggling to make the shift to manage costs. This has resulted in muted business from retail customers. 

Infosys has not named the head for Americas, a crucial market that generates over two thirds of the $10.2 billion revenue for the company. Sikka and Deputy Chief Operating Officer Ravi Kumar S are both based in the US.

“With the Indian IT industry undergoing transition, we believe stability within senior leadership is crucial. While Dadlani’s exit may hamper short-term momentum in manufacturing and the already struggling CPG verticals, we believe lateral promotions of Vaswani and Banga along with assistance of other senior executives will help Infosys tide over the exit,” the Edelweiss research note says.

Infosys earns 65 per cent of its revenue from US and Dadlani's exit comes at a time Sikka is struggling to revive large deals in its main market to show higher growth. 

He was the ninth executive, after Chief Compliance Officer David Kennedy and former head of consulting Sanjay Purohit, who quit the company ever since Sikka joined as the CEO. Other big-ticket exits during the past couple of years include Sanjay Jalona, Michael Reh, Samson David, Manish Tandon, Ronald Hafner and Anup Upadhyay. Of these, three were brought in by Sikka.

Since taking over, Sikka has tried to push for higher growth — promising to achieve $20 billion revenue by 2020, with operating margins of 30 per cent and employee productivity of $80,000. But he had under estimated the challenge.

The IT services industry is witnessing turbulence globally. Clients are shifting technology spends towards digital and cloud increasing the need for local consultants to work with them than sending projects offshore; automation is taking over low level maintenance and testing jobs, and there is growing protectionism for local jobs in developed economies. 

Sikka has increased focus on artificial intelligence and automation, while attempting to steer Infosys to become a software and services company. The company claims that it has been able to arrest the downslide it was witnessing before Sikka took over.

While business challenges remain, Sikka has also faced attack on failing corporate governance in the company, with the Infosys Founder N R Narayana Murthy leading the charge. Murthy has questioned the severance pay given to former Chief Financial Officer Rajiv Bansal and forced the company to reiterate its commitment to integrity and upholding governance norms.

Infosys has maintained that the public spat with Murthy had caused distractions. "Negative media coverage and public scrutiny may divert the time and attention of our board and management and adversely affect the prices of our equity shares and ADSs (American depositary share)," the company claimed in its filings to the US Securities and Exchange Commission.

Last year, Infosys had to cut its forecast twice from double-digit growths to finally register 7.4 per cent growth in revenue to $10.21 billion. 

On Friday, Infosys admitted in that it cannot achieve the $20 billion revenue target by 2020 set by Sikka. Likewise, Sikka's compensation will also be revised, Ravi Venkatesan, co-chair of Infosys, told the Times of India.

Infosys stock closed 1.24 per cent or 11.80 at Rs 940.50 on Friday on the BSE.