Vishal Sikka's appointment as the CEO and managing director of Infosys on Thursday is being seen as a positive move amongst the analyst community. Over the last one year top-level exits, high attrition rate across the board and below industry growth rate has cast a shadow over the company's future. Brokerage houses feel that this move has shed some light over the road ahead.
“The announcement of new CEO could lead to restoration of investor confidence in to the stock for the time being. Additionally, this move would bring more clarity inside the organisation on top management front. We could see better clarity emerging on sales strategy from here-on,” said Daljeet Singh Kohli, head of research, IndiaNivesh Securities.
This is the first time in its 33 year history that a non-founder will be heading the Bangalore-based software-services company. Prior to Infosys, Sikka (47) was the chief technology officer (CTO) and a member of the executive board at SAP AG, leading all products and driving innovation globally. He was responsible for developing and delivery across SAP’s product portfolio including software applications, analytics, cloud-based applications and mobile.
“Given his stature and experience with products and innovation at SAP, he will command the respect of Infosys’ leadership team and employees. In addition his strong client relationships can help Infosys win business with new and old customers and improve revenue growth,” noted Aniruddha Bhosale, research analyst, Deutsche Bank Research in its note.
Analysts pointed out that Sikka’s appointment at the country’s second-largest IT-services exporter will provide the much needed push for its 3.0 strategy, which set out to secure a third of its revenue from products, platforms and solutions (PPS) business. The over $8-billion company, globally renowned for its IT services, is betting on its fledgling PPS business, which currently accounts for only 5.1 percent of its overall revenue.
"Infosys’ focus on product, platform, and solution and consulting has failed to yield positive results due to a bad business cycle. We expect that under Sikka’s leadership, Infosys could renew its focus on Infosys 3.0 with growth from commoditised business IT as well," said Shashi Bhusan, senior research analyst, institutional equities, Prabhudas Lilladher.
Sikka, a Ph.D. in computer science from Stanford University, led multiple initiatives to accelerate innovation and research at the German software company. He was the brain behind SAP’s game-changing HANA, an in-memory database platform that processes high volumes of transactional data in real-time. His experience includes research in artificial intelligence, database and information management technologies and automatic programming.
According to executive chairman, NR Narayana Murthy, Sikka is the right candidate to lead Infosys in its next phase of growth.
“Vishal is well-known globally for heading the creation of Hana and in-memory database and has been hailed as wonderful leader and tech visionary. He has extensive experience in managing global corporation. His illustrious track record and value system make him the ideal choice to head Infosys,” Murthy said during the press conference on Thursday. Sikka will be inducted as a whole-time director of the board and CEO and MD (designate) on June 14, while he will take over from S D Shibulal from August 1st, the company said.
However, some analysts of the opinion that Sikka’s products background could be a concern for a software-services company like Infosys.
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