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5 things Vishal Sikka must immediately fix at Infosys

K. Yatish Rajawat
By K. Yatish Rajawat

1) Push. Make the Infosys bureaucracy start working like a corporation again. Over the years, old timers have accumulated at the software giant. These are employees whose stocks have vested and they have little ambition to stretch themselves.

2) Pull. Top leaders and the mid-level employees have to pull up their socks. Right now, the mid-rung has become lethargic and needs to be energized again.

3) Lure. At one time Infosys would attract the best, brightest, and hungriest minds in the country. The company could compensate them much better than any other employer in the country. This was due to stock options and not salary. Now stocks and options are no longer an incentive to join. Infosys is no longer a top attraction to young graduates. Infosys has also slowly dulled its recruitment engine into feeding numbers and not quality. This is the biggest challenge as it addresses the low-cost model it is dependent upon. As a services company, Infosys’ largest cost is its manpower. The base salaries at entry level for the company are low and do not even compare well with sectors such as infrastructure and power.

4) Earn. Infosys has much lower revenues per employee than Cognizant or IBM. Former CEO S.D. Shibulal tried to change this model by moving to products or ‘product-ized’ services. It did not work. It is difficult to shift directions so quickly, or to change the base revenues from person-billing to product. Vishal Sikka has been chosen for his background at SAP, a company that sells products bundled with services.

5) Fake it to make it. Sikka’s success depends upon the perception he is able to create both internally and externally. He has to convince not just employees but also investors. He has never done the latter in his past roles. If investors do not trust him, he will not last long. Here, he needs to take a leaf out of the Cognizant play book and set a lower and fixed expectation of growth and margins for the midterm. This will give him the space to turn around the company and prepare the engine for future growth.