Vishal Sikka’s journey at Infosys

In June 2014, when Dr. Vishal Sikka was appointed the CEO and MD of Infosys, India’s second largest IT services company, he was tasked to reshape the company’s business model. The first non-founder CEO of Infosys took the helm from S.D. Shibulal, one of the seven founders of the company. Three years and two months later, Sikka resigned from his post and is now the executive vice chairman until the board appoints a new CEO and MD.

In the meantime, Infosys veteran U B Praveen has been appointed as the interim CEO and MD. In a letter to the employees, Sikka wrote, “It is clear to me that despite our successes over the last three years, and the powerful seeds of innovation that we have sown, I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks.”

During Sikka’s reign, not only did Infosys report a growth in its revenue but the company’s retention rate also improved. Additionally, the net profit of Infosys grew a staggering Rs 2,000 crores from Rs 12,329 crores in FY15 to Rs 14,353 crores in FY17.

Read more: How Infosys fared under Sikka

Sikka’s plan was to remake Infosys into a full blown technology company. In a tweet in July 2017, he was seen aboard a driverless cart in the company’s Mysore campus, built to train the employees about new technologies like artificial intelligence (AI) and machine learning.

In his letter, he illustrated the company’s growth in the last three years under his regime, and added, “We have grown our revenues, from USD 2.13 billion in Q1FY15 to USD 2.65 billion this past Q1. We did so while keeping a strong focus on margins, closing this past quarter at 24.1 percent operating margin, beating some competitors for the first time in many years, and improving against most in our industry. Perhaps more importantly, our revenue per employee has grown for six quarters in a row. Our attrition has fallen, from 23.4 percent in Q1FY15 to 16.9 percent this past Q1, and high performer attrition is hovering at or below the single-digit threshold for a while now. We grew our USD 100 million-plus clients from 12 when I started, to 19, and increased our large deal wins from about USD 1.9 billion in FY15 to about USD 3.5 billion this past year.”

During Sikka’s tenure, Infosys witnessed a 13.3 percent revenue growth in 2015-16, compared to the 7.1 percent growth seen in 2014-2015. Additionally, Infosys’ attrition rate dropped to 12.6 percent from the previous 13.4 percent. However, Sikka’s entry was followed by ten prominent exits, most of who were brought in from SAP, where Sikka worked prior to Infosys.

Read more: Major exits at Infosys during Sikka’s regime

Following revenue growth of 2015-16, Sikka announced that the company was targeting a revenue of USD 20 billion by the year 2020, from its then revenue of USD 8.7 billion. To achieve this, the company would have to grow at a CAGR of 18.11 percent, a feat later admitted by Sikka and the board to be “impossible to achieve.”

During the same fiscal, the company added 325 new clients, higher than the 200 clients acquired in the previous five years, and the cumulative value of large deals rose from USD 1.9 billion to USD 2.7 billion.

However, the 2015-16 earnings reports also revealed that Sikka’s salary had been increased by 85 percent from the previous year. A sharp contrast to the rise in the median employee remuneration of only 6.4 percent, this brought him under a lot of scrutiny. But in 2016-17, Sikka drew 61 percent of his promised compensation. His salary has been questioned by the company’s founders but the Board has always maintained that it was linked to steep performance goals.

In 2016, the much lauded ‘Zero Distance’ drive was launched as a part of Sikka’s plan to engineer more business and increase productivity by pushing employees to come up with ways to help solve customers’ complex problems.

It was in February 2017 when the biggest blow of Sikka’s stint at Infosys was delivered. An anonymous whistleblower claimed that in 2015, the Infosys CEO had bought an Israeli company, Panaya for six times its revenue. It also alleged that Sikka had agreed to a huge payout for Rajiv Bansal, former CFO of Infosys, who was against this acquisition, without the knowledge of the board.

When founder N.R. Narayan Murthy demanded that the Board release the full investigation reports related to the deal, it was refused. Later, the company was given a clean chit post an independent forensic investigation by US law firm Gibson Dunn & Crutcher.

Following US President Donald Trump’s appointment, Indian companies were facing a lot of challenges in doing business in the US. However, Sikka saw more opportunity in the situation and was quoted saying that he sees “tremendous opportunity to do innovative work,” and that Indian companies have a bright future.

While his three years at the helm of Infosys yielded several profits, Sikka’s stint was marred by controversies, failure of governance and criticism from founders, eventually leading to his resignation.

Post his resignation, Infosys suffered a 9.57 percent drop in its share prices, and a Rs 30,000 crore loss in market capitalization. With the Board’s promise of a new CEO and MD latest by March 2018, only time will what the future holds for Infosys.