Two Big Bets Salil Parekh should take as CEO of Infosys
The paint on the signboard with the next CEO of Infosys is fresh. Thats fresh cheer for stock markets in Mumbai. Infosys was always a darling! Salil Parekh will quit his executive board position at Capgemini, a French IT services company, to join Infosys. This in spite of prevailing sentiment that this time it has to be an old hand. Especially under the circumstances leading to Vishal’s resignation. The culture argument is that an outsider doesn't get how Infosys works. Leadership they believe needs to be sitting closer to its headquarters in Bangalore. At least, I did so too, having spent few years there between 1995 and 2006.
Nandan Nilekani, co-founder of Infosys, author of 'Reimagining India' is a wise man. As the person tasked with getting Infosys back on track, he is well-aware of challenges ahead at Infosys. Nilekani said “the challenge before companies like Infosys was to get people to be up-to-date on current technology, current development and how they learn the latest.”
Considering his recent experiences in helping build the worlds largest bio metric identity system, Aadhaar, and on his way to build the next high impact ‘societal platform’ at Ekstep; to build scale fast, and to generate critical impact requires a commitment, a no nonsense attitude. Sentiment doesn't help here!
The choice in Salil Parekh, an outsider to Infosys, yet a veteran at scaling Capgemini India operations in a market that was already witnessing eroding margins coupled with a need to reskill for new technologies reflects this approach. A Reuters report quoted Nandan saying “He (Parekh) has nearly three decades of global experience in the IT services industry. He has a strong track record of executing business turnarounds and managing very successful acquisitions.”
There are several issues to get around once Salil steps into Infosys in January 2018. But two will standout in how he leaves a lasting impact on the organization. OK, three!
#1 BIG BET - Picking up on the foundation laid by Vishal Sikka in Artificial Intelligence will be first big bet. Predictive Analytics Today did a comprehensive analysis of leading AI platforms. In that report, Nia, Infosys's AI platform ranks fourth alongside Wipro’s Holmes and those from stalwarts such as Google, and Microsoft. Not included in this list is Indian IT leader TCS’s AI platform Ignio. But, the big boy way ahead in the AI game is IBM’s Watson. Reported widely, Watson's estimated revenue stands at US $100 million over the past three years. IBM has set an ambitious target of $10 Billion by 2023. This is likely a challenge in this otherwise exuberant market, even for Watson.
For Salil at Infosys, the challenge will be similar. Infosys needs to solve its clients problems fast, and show business value from such solutions. He should build on Infosys’s attempt to invigorate the solutions space with its ‘Innovation Hubs’ that hire local talent, which includes user experience and design. Infosys has traditionally had the advantage over its competition, at least the India based ones, in cementing strong client relationships. Salil should quickly press these forces to deliver application ideas for Nia and other advanced technologies it possesses and show results to its customers. And the place for the action for this big bet will be its Innovation Hubs. This is very different from the past model of capturing functional requirements as usecases; a template driven approach.
Here one needs to collaborate, and co-create solutions. If such concerted effort plays out well, it will be the first solid differentiation Infosys can highlight. The transformation will need to be away from its offshore centers and closer to the client location.
Re-skilling its offshore armies of developers and technologists is already underway. Efforts include collaboration with leading online trainer Udacity to deliver ‘Nanodegrees.’
#2 BIG BET — This is more up Salil’s sleeve ie. M&A. For Infosys, India business is not as significant in revenue terms as it is in visibility. The much touted GST, a taxation modernization effort, has been an issue for Infosys which built and deployed it for the Government of India. India’s small businesses are up in arms against them for what they claim is poor performance and several glitches, especially its usability. Infosys though defends its record. Quoting from the report “Given the complex nature of the project and rapid change management, there have been several stakeholder concerns that have also been raised. Some of our finest engineers are supporting the GSTN team as they work towards resolving these and serving all stakeholders.”
In the past, rapid growth for service companies such as Infosys has come from implementation and customization of products. Honestly this did not involve that great an amount of thinking and innovation since the problem is already solved by SAP, Oracle, Microsoft, etc. Strategic problem solving skills is a culture and capacity found readily at reputed consulting firms such as McKinsey, BCG, Bain, Deloitte, Booz Allen, so on. Infosys has time and again tried building such a practice but has not delivered on that front as expected. But, the Innovation hubs planned at strategic locations across USA and Europe will help stimulate these problem solving skills and deliver results.
Culture inherent to a business is the big elephant in the room and there is no way past that. This applies to India too.
Especially for a high visiblity solution such as GST portal for the Government of India that impacts hundreds of millions of ordinary Indians. Now, who understands the financial thinking of millions of businesses in India better than Bharath Goenka, the founder of Tally ERP, India’s leading a ERP and accounting software product company. The journey of Tally started with a challenge posed to Mr.Goenka by his father, “Are you writing programmes to make the life of the programmer easier or the life of the user easier?”
Early on he understood the culture of accounting preferences of Indian book keepers. There are consultants like Rohit Choudhary who says “It is an accounting software with a soul!” and that “You simply don’t change for the sake of changing. Tally’s interface is very simple, unique and user friendly.” While there is a universal lesson in such philosophy, its important to note that that simplicity has emerged from a focus on what users seek or how they work.
Salil has a radical option of co-opting this deep learning on how millions of Indians prefer managing their business accounts, while they get around to complying with the new tax regulation with over 99% of taxpayers registering in a record time. If we accept the simple assertion that Bharat Goenka understands this behaviour well, then Salil should acquire Tally, convert it into a open platform, and offer it with tighter integration to GST portal, reducing the burden on users to mastering new software, instead, using the Tally like experience to segway into GST portal.
Now, would such an acquisition actually pay off in terms of license fees or subscription fees, assuming it offers a freemium model to millions of users, where they pay to upgrade. It may not. But there is a larger political gain if this is pulled off in a record time before the next general elections, and for Infosys a greater clout and influence on policies that impact its operations. One can only imagine other unknown benefits from a platform such as this when linked to other Government digital programs including Aadhaar. There could be stories of efficiency, inclusion and benefits for millions of Indians.
For Infosys, these two big bets could truly transform it into a next generation solution company, accompanied with impact and influence, built on a robust base of an efficient service culture.
The third bet is ancillary to the previous two. Salil will need to convince the Infosys board and takes them along, including prominent shareholders like Mr.NRN Murthy for these initiatives, and with transparency. But with Nandan as Chairman to guide him, the journey should be easier for Salil as compared to Vishal, relatively speaking. Now, time will tell soon whether he will be successful or not and be that bold transformer Infosys needs. But then again, he is an outsider!