On Friday, while announcing its results for the quarter ended 31 March, 2018, IT services major Infosys said it will sell Panaya, the Israeli automation subsidiary it acquired during former CEO Vishal Sikka’s tenure. The 2015 Panaya deal was the tipping point for former Infosys chief Vishal Sikka, handpicked by co-founder Narayana Murthy for the top job. The allegations leveled against Sikka and the Board back then was that Infosys overvalued Panaya. Furthermore, Murthy, a shareholder, also questioned the hefty severance package handed out to former CFO Rajiv Bansal.
The decision to sell Panaya can also be seen as a change in mindset of the new management under current CEO Salil Parekh, said sector experts. “A merger isn’t just about the technology that comes with it but the overall fitment in the broader scheme of things like cultural match which is the hardest task amongst all. We must give Salil time to explain, and more importantly, justify his decision to sell Panaya and not necessarily read it as an undoing of what Vishal did,” said Sanchit Gogia, Chief Analyst, Founder & CEO of Greyhound Research. He points out that Parekh is continuing with Sikka’s legacy in the form of ‘Nia’, an AI platform for businesses rolled out by Sikka. “This is going to be a breather for clients and investors.”
IT budgets are moving away from chief information officers and are now in the hands of chief marketing officers. In this scenario, the WongDoody acquisition is important, said Gogia. According to a recent Greyhound Research report, 50 percent of all IT budgets will sit with roles other than those of the CIO by 2020. “What particularly stands out is the focus on remaining relevant, on relying on CMOs instead of CIOs, which is evident in the WongDoody deal. It’s Infosys’ first credible attempt in wanting to remain relevant in the new-age of digital. This is a first for Infosys and will take it’s own course before it becomes a company culture – hence it’s critical that the street manages expectations. Lastly, it brings a net-net talent set to the company’s portfolio which the clients expect today,” Gogia added.
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Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, an award-winning global research & advisory firm. To read more about him, click here.
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