India's business turnaround king


Shilpa Kannan

Feb 29, 2016

Vishal Sikka did not have an easy job in front of him.
Appointed chief executive of Indian IT firm Infosys in June, 2014, he was tasked with turning around the fortunes of a business that was struggling.
Long a poster child of India's multi-billion dollar IT services industry, Bangalore-based Infosys had seen its star wane.
The company's financial results were failing to meet market expectations, and its share price had fallen sharply.
Once the largest such Indian firm, it had been overtaken by its rival Tata Consultancy Services.
Yet the biggest concern for Mr Sikka was the fact that Infosys was haemorrhaging staff. Between April and June 2014 almost one in five employees left the company, an all-time high level for the business.
So no pressure at all for the then 47-year-old, the first person to be brought in from outside the firm in its 35-year history to lead Infosys.
Inspiring staff
A Indian American who had previously been chief technology officer at German software firm SAP, Mr Sikka says his first task was to stem the staff exodus, and to boost morale among its 193,000-strong workforce.
Within a week of taking up the job he had promoted almost 5,000 people, who got a pay rise.
This was the immediate quick fix, but Mr Sikka's vision for the longer term was to change the way Infosys did business, to move it from low-cost to higher quality - if you provide a better quality product or service you can generally charge more for it.
Like its industry rivals in India, the majority of its business is doing IT work for clients in the West. In Infosys's case, its customers include US giants Apple and Wal-Mart.
"Historically the idea was more around following orders, doing what we were told, and doing projects," says Mr Sikka.
"Everyone had more or less the same quality, and the one who did it cheaper got it [the contract]."
Infosys's workers have been encouraged to be as innovative as possible
To change this, Mr Sikka introduced a concept called "zero distance", which he says was "an initiative to inspire every single project team in the company to do something innovative for our clients".
To help them, the company held "design thinking" workshops for tens of thousands of employees, including engineers who were encouraged to come up with more efficient ways of completing their projects.
Mr Sikka says they have already saved more than $1bn a year.
'More innovation'
Mr Sikka has also led Infosys to introduce more automated systems. In the third quarter of 2015 alone, he says the firm was able "to save about 1,100 people's worth of work because of automation".
However, instead of laying off the people affected, they have instead been put to task "on more innovative and value added jobs".
Mr Sikka says moving to more innovation is vital because Indian software firms can no longer reply on simply being cheaper than those in the West.
"Automation as a productivity driver, and creator of a better solution," is essential, he says.
Another area where Mr Sikka has increased Infosys's focus is in artificial intelligence (AI), creating the robots of the future.
"Before we concerned ourselves with the fear of robots taking over the world," he says. "Today we talk about driverless cars, machines - everything from turbines, to airplanes, to trucks - that predict their own maintenance needs, and store shelves that trigger their own restocking."
Mr Sikka, who is predominantly based at Infosys's office in California's Silicon Valley, has also sent the company on the acquisitions trail, setting aside $500m (£360m) to invest in innovative technology firms around the world, such as Israeli firm Cloud Endure and US start-up Whoop.
'Clear articulation'
And Mr Sikka has also improved Infosys's financial performance.
The business is now enjoying its strongest growth in five years, with its results exceeding market expectations. Its turnover for the three months to 31 December was $2.41bn, up 8.5% from a year earlier.
Meanwhile, the number of staff leaving has fallen substantially.
With annual revenues now around $8.7bn, Mr Sikka has set a target of increasing this to $20bn by 2020.
Not everybody thinks this is achievable.
Arvind Ramnani, an analyst at financial research group Gordon Haskett, praises the work Mr Sikka has so far done at Infosys, but adds: "Sikka's clear articulation of strategic priorities has improved employee morale and confidence, which had eroded considerably, but we see his longer-term targets as very aggressive."
However, his performance has impressed Infosys's board so much that his contract - which is worth $11m a year - has been extended from 2018 to 2021.
Not bad for the son of a teacher and an Indian railways engineer, who after a childhood in the Indian states of Madhya Pradesh and Gujarat went to the US to go to university.