The end of India's IT miracle: Vishal Sikka

By the early 2000s, Infosys had grabbed leadership of India’s competitive outsourcing sector, winning plaudits from the likes of Forbes Asia and a roaring stock market valuation. Its founding group figured among India’s richest. In recent years, however, even as revenues and staff count continued to grow, the company seemed to lose its mojo—as well as 17 percent of its market cap since the peak in December 2010.

With customers and top talent exiting, Infosys a year ago turned to Vishal Sikka, an executive board member of Germany’s SAP, to be its first non-founder CEO. Sikka, 48, grew up and went to school in India, then got his engineering degree at Syracuse University in the US and added a PhD in artificial intelligence at Stanford. He ultimately joined SAP in 2002 and became the software giant’s chief technologist in 2007.

An effervescent personality, he is acting to restore Infosys’s brio while living (travelling, mostly) away from the firm’s Bengaluru headquarters. He spoke to Forbes Asia recently on one of his monthly visits to the Electronics City suburban campus. Excerpts:

Q. What brought you to Infosys at this point?
The ball started rolling the day I quit SAP. I got a call from a search firm about Infosys. It was an iconic company when I was growing up, but all I had been seeing was bad news. Initially, I wasn’t clear how it was going to work. I live in California, and Infosys is based in Bengaluru. But I was quickly convinced. There were three reasons for my joining. One was my deep connection with KV Kamath [former Infosys chairman]. Then there was the Infosys culture that [Narayana] Murthy had built, an education-driven culture. When we met, Murthy gave me a puzzle. It was a matrix involving several rows and columns. I was able to solve it. I was impressed that he was so deeply grounded in reality. There was also a third reason—the opportunity to do something back home in India.

Q. What were the challenges you were confronted with?
Senior leaders were leaving; the company was facing growth challenges and attrition. What was a surprise, however, was the fact that so many processes around go-to-market and sales were not in place. When you work in a large Western multinational, you take these things for granted. Infosys had been a standard-bearer in the early days—it was such a differentiated company that nobody thought to build something. The fact that you were Infosys was reason enough for customers to buy your services. Several years later, however, things had turned much more competitive. Our rivals had created great sales and marketing machines. The second shock was encountering the feeling that we are inferior to others.

Q. Wait—at the great Infosys, a mindset like that? What’s an example?
As an IT services firm, we are not supposed to innovate; we just do what others tell us to. That thinking makes me angry and disturbed, and I’m determined to change that. We don’t realise that everything around us is built by us or companies like ours. Every airplane we fly in has a lot of software and hardware designed by Indian engineers. It’s the same with the cellphones we use. We do extraordinarily distinguished things for the world. But I kept hearing from customers, you are not proactive; you don’t participate in our innovation journey; you don’t help us make things better.

On the plus side, a pleasant surprise is our education infrastructure. At Infosys, we can train 15,000 employees at one time. There can be no parallel in the world. Since I’ve joined, we’ve trained 10,000 employees in design thinking. [That’s to bring in creativity.] Being able to do that gives a company such extraordinary power; it shows the willingness to change. Ours is a young company and the positive energy is incredible—employees have taken 20,000 selfies with me since I joined.

Q. Is this the end of India’s “IT miracle” as we know it?
It is dead; it is over. There’s no doubt in my mind that the old model is no longer relevant. Things are very competitive. The advantages of geolocalisation are available to everybody. Automation is a big thing—it is extremely easy to be disintermediated.

Q. What is the new model for Infosys?
The theme is ‘Renew and New’. We want to renew and improve the way we do things. We have folded in Lodestone [a Zurich consultancy acquired in 2012] and deeply integrated that into the company. That team has 100 very distinguished senior people, and each has been allocated two of our top 200 customers. They will co-lead with the sales team, and the combination will bring the company to the client in a more holistic way.

A central team led by a brilliant design thinker will weigh in on every proposal we make. That team has helped us bag five major wins in the last few weeks.

I find the whole system of RFPs [requests for proposal, seeking bids] bizarre. It’s like saying you don’t know who you should give the business to.

Q. What has changed in the way you do things?
Our lifeblood remains projects. We have 35,000 projects underway and, of them, 8,500 are master projects. We studied 7-8 of them in detail and found a common pattern, a straightforward template that we rolled out to 1,000 project managers.

Our banking team used this to consolidate 13 different applications into four and give a customer $1.2 million in savings. For Boeing, we are working on a knowledge-based project where we are offering them a forecasting service—a visibility into future revenues. All this is measurable impact.

If automation takes over manual, repetitive tasks, “What will employees do?” is a question I’m often asked. But artificial intelligence amplifies people, makes them more capable. We have to embrace automation and artificial intelligence, where people go from problem solving to problem finding.

Q. Talent retention has been a challenge. You’ve been generous with raises, you’ve given iPhones to top performers and relaxed the dress code for employees.
Attrition has come down dramatically. About 2,850 people quit in the month before I joined. This March, 1,350 employees left; the number has halved. It has to do with a sense of purpose. We are all looking to participate in something that is bigger than all of us.

Q. You often talk about innovation at Infosys.
Three of Infosys’s best educators spent three days at the design school in Stanford. Then three from the design school came to our Mysore training campus for two days. Between them, they have trained 31,000 people. It is unbelievable.

In our ‘Renew and New’ theme, a large part consists of wrapping our heads around the unknown.

Q. You have set up a $500 million fund to invest in startups after investing $200 million in acquiring cloud services firm Panaya in Menlo Park, California.
We celebrate startups because entrepreneurs find things we didn’t know we wanted. Problem finding is that skill where we think of innovation as desirable, feasible and viable. Infosys will have tens of thousands of employees who will become problem solvers for our customers. They will be the entrepreneurs who go in search of the problems, and they will be strategic to our business. We can be the private equity company that invests in people who are finding problems and solving them. There are tremendous startups in the Silicon Valley, Boston, Israel, Ireland, Berlin, China. We want to invest in them and participate in their financial success.

Q. You’ve talked of going to $20 billion in revenues by 2020 from $8.7 billion now. How?
The $20 billion is an aspirational goal. We don’t yet have an exact operational model worked out. But roughly $1.5 billion will come from acquisitions, from the companies we acquire. Another $2 billion will come from our “New” strategy—new platform work, new applications, working with startups. Then 13 percent revenue growth per year is required to get to the $20 billion. We should be able to do it.

Q. What is the advantage Vishal Sikka has given Infosys over its competitors?
I have a lot of personal, heartfelt relationships. Many customer CEOs are friends from before my time at Infosys. There is a personal element to all my relationships. Life is too short not to be real at relationships.

Q. How do you run a large company based in Bengaluru when you are physically in the Bay Area and are now building a team there with several former SAP executives? Is the Bay Area the nerve centre of Infosys now?
The nerve centre of Infosys will always be Bengaluru. It is an Indian company—its heart is Indian. But it is a global company at the same time. There is a team in Palo Alto, California.

Each month I spend one week in Palo Alto, one week in India and two weeks on the road. My predecessor, [former CEO] SD Shibulal, told me he spent seven weeks each quarter on the road. I don’t see my being based in Palo Alto as an issue. My wife is my hero; my wife gives me the strength for this insanity. Infosys has a very widely distributed team. Pravin [COO and board member, Pravin Rao] is in Bengaluru. I come here once a month. That is the model we have set up.

Q. What will the next-gen IT services firm look like?
Ideally, we need to get away from the staff-augmentation model; we need to amplify our abilities. Our teams will work together with customers, running their existing operations as well as being their innovation partners to help them achieve their future objectives. Amplification is better than augmentation.

India needs a human resources revolution similar to its Green Revolution in the 1970s. It created a tremendous amplification of farmers’ abilities—the number of farmers decreased, but the amount of food we produced grew tremendously. We need to similarly amplify our human resources strength through software.