Seldom has the industry seen the tumultuous effect brought about by a corporate step down like Vishal Sikka’s did earlier today.
Sikka’s resignation as CEO resulted in Infosys’ share value dipping by over 9 percent intraday, a 52-week low (as of 1400 hours, IST).
On 12 June 2014, India’s second-largest IT services exporter, Infosys, named Sikka as its CEO and MD. Sikka took over from then-CEO SD Shibulal, one of Infosys’ founders.
Within a year of Sikka taking over the company’s helm, its revenue grew by 4.5 percent sequentially to USD 2.25 billion in the three months. That’s about USD30 million more than the estimates of finance pundits. The most optimistic estimate expected the company to grow by 3.5 percent.
During this phase, Infosys raked in USD 1.93 billion in total contract value of deal wins. And this number spiked up by over 30 percent to USD 2.79 billion in FY 2015-16.
Sikka took over as Infosys’ CEO and MD in August 2014 when the stock’s valuation was inching lower every quarter. Between 2010-11 and 2013-14, Infosys recorded an annual growth of only 11 per cent. TCS in comparison clocked an impressive 18 percent.
Under Sikka, Infosys’ net profit grew by roughly Rs 2,000 crore (Rs 14,353 crore as on March 31, 2017). Sikka was able to maintain the company’s operating margin at par with major Indian IT firms despite a turbulent business environment.
At the end of March 31, 2017, that’s two years and five months into Sikka’s leadership, Infosys’ operating margin stood at an impressive 24.7 percent.
The company launched more than 25 new services which rose to 8.3 per cent of revenue last quarter, from zero per cent in April 2015.
Revenue growth for the full year 2015-16 was 13.3 percent, ahead of both its own guidance (10-12 per cent) and market estimates.
Under Sikka’s tenure, the attrition in the recent March 2016 quarter was 12.6 per cent, down from a year ago of 13.4 per cent and way lower than 21.1 per cent in the September 2014 quarter.
What went against Sikka
Sikka had set a goal of more than doubling Infosys’ revenues to $20 billion, with margins of 30 per cent and employee productivity of USD 80,000. Now, this went against the company’s belief in under-promising and over-delivering.
Following alleged governance lapses, Sikka faced the brunt of the company’s co-founders and share holders. In addition to this, Sikka’s salary hike was a good 85 percent while the increase in the median employee remuneration was a mere 6.4 percent.