Nilekani's return must stabilise the ship but this won't change headwinds for the IT industry
Nandan Nilekani aid it himself on Twitter. He first joined Infosys as a 26 year old and returns to the company that he founded along with others as a 62-year old. Infosys is now a company heading into middle-age but has been suffering one mid-life crisis after another. With Nilekani at the helm a decade ago, Infosys was a darling of investors and among the triad of Tata Consultancy Services, Wipro and itself it was the only entrepreneurial company much before today's day and age of the entrepreneur as a super-hero. Aided by a constant supply of software engineers and the cost arbitrage opportunities that India offered Western companies, the IT services industry became India's answer to China's manufacturing industry. And Infosys as a company came to define the rise of Bangalore from a small, green ‘Garden City' into a glass and concrete megapolis. But when Nilekani left Infosys under a decade ago to create the Universal Identification System in India, what is now known as Aadhaar, the IT services industry began to face severe headwinds. The first, unsurprisingly, was a pushback from western countries which saw Indian IT professionals ‘take away’ skilled jobs. In addition, there is little doubt the Indian IT companies games the US visa system with increasing H1B visa allotments which led to calls in the US to change the system which is underway. The other major change though was the change in the way companies and individuals both consumed information technology with the smartphone revolution. Systems moved to the cloud, automation took over repetitive coding tasked and with huge developments in Artificial Intelligence, development costs came down and as Indian salaries went up, the arbitrage opportunities began to filter away. Indian companies do still compete on skills and talent but yesterday's startup finds itself outmanoeuvred by younger startups, many of them based in Silicon Valley. This was possibly one reason why Vishal Sikka the effectively ousted former Chief Executive of Infosys based himself in Northern California rather than the renamed Bengaluru.
Sikka had some interesting new ideas and a new vision for Infosys, of that there is little doubt. He had joined Infosys with the blessing of Nilekani's co-founder NR Narayana Murthy . Yet, some of the questions raised by Murthy with regards to salaries, severance pay and even an acquisition are very troubling and clearly Sikka and the former Board of Directors did not answer those questions. Nilekani's return will be welcomed by a lot of the staff but not only does he need to ensure that the truth about the allegations comes out for better or for worse but also ensure that the company can turn its fortunes around. And the latter task might be the toughest challenge he has ever faced.