Vishal Sikka is a great CEO for Infosys—the proof is in the numbers

I did it.
I did it.
Image: Reuters/Abhishek Chinnappa
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A year ago, Infosys—India’s second largest information technology (IT) services company—had surprised many by announcing the appointment of Vishal Sikka as its chief executive officer. This was the first time since 1981—the year the company was founded—that the CEO role went to a non-founder.

Sikka was an outsider not just to Infosys but also to the Indian IT services industry. In his last role, he had served as an executive board member at software major SAP in California.

At the time, many people had raised doubts over Infosys’ choice for CEO, as Sikka’s experience of leading software products at SAP was far from Infosys’ bread-and-butter business of IT services.

However, four quarters later, there are enough reasons for the sceptics to put all doubts to rest.

Infosys—which provides IT services to clients like Apple Inc, Wal-mart Stores Inc and Volkswagen AG—today posted a 7% rise in quarterly revenue. This is the highest sequential growth in 15 quarters. Net profit for the quarter rose 5% compared to a year ago.

The company’s performance during the first quarter of the current financial year was aided by its focus on automation and operational efficiency—two of Sikka’s pet areas since he joined the company.

Under his leadership, Infosys has also started making bets on high-margin services such as artificial intelligence and digital technology.

“Efforts in redesigning our clients’ experience and our widespread adoption of innovation, both in grassroots and breakthroughs, are starting to bear fruit in large deal wins and in the growth of large clients,” Sikka said today (July 21) in a statement.

“We have our eyes set to meet our revenue target of $20 billion by 2020, and this quarter’s performance is a great step in that journey,” he told television channels earlier today after the company announced its financial performance for April-June 2015. “We are excited and very confident about the path we are on in the longer term.”

Reacting to the good earnings, Infosys’ shares rose as much as 15% during the day on the National Stock Exchange.

Here’s how Infosys’ revenues and net profit have fared during the last five quarters. Sikka joined as the company’s CEO in the middle of the July-September 2014 quarter:

Improving health

One of the key challenges for Sikka after he took charge as the CEO on August 01, 2014 was to curtail the rising rate of employee attrition. Unhappy with the company’s poor financial results and tepid salary increments, employees were moving out of Infosys in big numbers to look for better opportunities.

The company had seen at least 13 top-level exits between 2013 and 2014.

However, Sikka spearheaded several initiatives to make Infosys a desirable place to work at.

To boost the morale of the top performers at the company, Sikka had rolled out 5,000 promotions within his first week at the job. Over the following months, he engaged with employees through initiatives such as  ”Murmuration“—a programme to crowdsource ideas from employees. He also allowed all employees to wear denims and casual clothes to work throughout the week.

The efforts are reflected in the low attrition rate of 19.2% (on an annualised consolidated basis) during the quarter ended June 30, far lower than 26.4% from a year ago.

Among other signs that indicate that Infosys is getting its act together is the strong rise in business volume.

Infosys’ order growth rose 5.4% sequentially—its highest growth in nearly five years. The increase in business volume for Infosys is higher than the 4.8% booked by larger peer Tata Consultancy Services during the same period.

When asked by a TV channel about how he appraises his performance at Infosys during the last year, Sikka said, “I think the only metric that matters is, are you having fun and are the people around you having fun. That’s happening. All the other metrics are for others to check.”