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Infosys ends months of boardroom squabbling and names a new chief

Indian IT giant taps outside leader as new hope to get back on track

Infosys' headquarters campus in Bangalore, India (Photo by Yuji Kuronuma)

MUMBAIInfosys' three-month search for a new head has ended with India's second-largest software services company naming Salil Parekh as its next managing director and chief executive.

Parekh, a board executive from the French information technology company Capgemini, will take over from Jan. 2, Infosys said in a filing to the stock exchange on Dec. 2.

Infosys Chairman Nandan Nilekani noted that Parekh has nearly three decades of global experience in the IT services industry and a "strong track record of executing business turnarounds and managing very successful acquisitions."

"The board believes that he is the right person to lead Infosys at this transformative time in our industry," he said. Parekh holds master's degrees in computer science and mechanical engineering from Cornell University, and a bachelor's degree in aeronautical engineering from the Indian Institute of Technology.

Salil Parekh   © Mint/Getty Images

Parekh will replace U.B. Pravin Rao, who took over as interim chief executive after Vishal Sikka's abrupt exit amid a fight with one of the company's founders, Narayana Murthy, in August. Sikka announced his resignation saying he was tired of "constantly defending against unrelenting, baseless, malicious and increasingly personal attacks," and thought it was better to part ways with Infosys because he felt unable to focus on growing the company.

Rao will continue as chief operating officer and as a director.

Murthy had raised corporate governance issues in some decisions taken by the board, including a 173.8 million rupee ($2.69 million) severance package given to former Chief Financial Officer Rajiv Bansal, and the $200 million purchase of Israeli company Panaya in 2015. However, an independent investigation later cleared Sikka of any transgressions.

The resignations of then-Chairman R. Seshasayee and independent directors Jeffrey Lehman and John Etchemendy followed after Nilekani took charge in the months following the public squabbling.

WHAT'S NEEDED In a separate statement, Paul Hermelin, chairman and chief executive of Capgemini, thanked Parekh, saying he contributed to the group's development in India and in the U.S.

Parekh joined Capgemini in 2000 with the acquisition of the consulting division of Ernst & Young. He occupied various leadership positions in the group.

According to media reports, advisory arm Everest Group chief executive Peter Bendor-Samuel said in 2015 that Capgemini achieved vastly greater growth under Parekh than had been expected.

This could be what Infosys needs, as the IT sector is going through its slowest period of growth. The Bangalore-based company has already cut its revenue growth forecast for the year to 5.5-6.5%, from 6.5-8.5%. Its consolidated net profit for the September quarter was up by a lukewarm 3.4% to 37.26 billion rupees.

Chairman Nilekani has stressed that the company will continue looking at acquisitions to accelerate its pivot to new technologies, as it embarks on a strategy of building platforms for its customers that bundle software products with services.

Nilekani underlined the company's effort to rapidly scale up digital services, train and retrain employees in new technologies, and take stock of how its various products and services can be integrated.

Aston Business School doctoral research scholar Sanjoy Sen reckons Parekh's appointment will likely be viewed positively in Infosys' journey to rebuild its business position. It should also be seen as evidence that Nilekani can deliver on his promises, amid months of speculation that Infosys was unable to find the right candidate.

"Salil's eminence and grooming in India will be a strong advantage to establish the right face to the Infosys brand, in addition to his experience of working across global cultures," he said.

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