Tough road ahead for Sikka at Infosys

India's second largest IT services provider Infosys has finally put to rest all the rumours as it announced Vishal Sikka's name for the role of CMD. But that's just half the battle won.

Sikka, 47, who till recently was at the helm of technology changes at the global products and services firm SAP, has a tough road ahead and will need to take some bold and swift actions.

The immediate task in front of Sikka will be team-building across the company. 

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The recent top-level exits have not done much good for the company, repercussions of which can be seen in the overall attrition rates that have been just going up. 

"The new CEO will have to move very quickly to first calm the three key stakeholders -- employees, customers and the investors, in that order. Infosys cannot afford any more resource departures especially at senior levels. He will next have to establish credibility with those stake-holders, again, in a fairly short period and then energise them in the medium to long term.

"The medium-term strategy will have to be fairly close to the knitting of the IT services industry -- anything else will create a level of confusion and uncertainty again," said Partha Iyengar, country manager -- research, Gartner India.

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Sikka's appointment is crucial not only from the fact that he is the first non-founder at the helm of the company, which means he is capable of bringing new and fresh thinking into the working, but he is more of a technocrat involved in research and development. 

"In order to be successful, we believe Vishal will have to run two set of priorities in parallel: 1) Continue to focus on traditional IT services deals to meet the market and shareholder's expectations; 2) Develop new capabilities for Infosys to win in the digital world," said Manish Bahl, vice president and country manager for India, Forrester Research.

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One thing that also goes in favour of Sikka is that he is well known in the US, which would mean he can open up doors for Infosys. 

But many are also wondering if Sikka, who has so far been a technocrat, can manage sales and understand the services industry.

"Vishal has been a cutting-edge CTO. But the downer to me is that he's been focused more on the R&D/product development side and has presumably not handled large P&Ls/operations. Infosys needs more than an excellent technocrat as a CEO; it needs a CEO who with the help of a visionary technocrat can figure out credible ways for Infosys to compete in the ever-evolving tech world," said Viju George of J P Morgan in an earlier note.

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Other than creating a credible leadership team, Sikka will have to focus on the narrowing margins and the soft topline. Add to this, he is a complete outsider who needs to understand the Infosian culture at first and then add his own element to it. 

Sikka's appointment would mean a big boost for the company's Infosys 3.0 strategy. But many also feel that the product, platform and services play is a long-term bet. At present it is just about six per cent of the revenue. Sikka may be able to hasten the process but cannot reverse the revenue mix from services to products in short-turn, say analysts. 

For Sikka, who was one of the main contributors to the development and marketing of Hana, the flagship product from SAP, it certainly does not look like a cake walk.