Mumbai: The appointment of Salil Satish Parekh as the managing director and CEO of Infosys has triggered speculation over whether he will continue with the transformation begun by his predecessor Vishal Sikka in initiatives such as cloud computing, automation and artificial intelligence.

Observers tracking the $10.5-billion IT services company remain optimistic. They feel with traditional IT services getting commoditised, there is little reason why Parekh will do otherwise even as some tweaks in the strategic direction of the Bangalore-based firm cannot be ruled out.

Parekh comes armed with expertise in new services; one of the areas he led at Capgemini was the cloud business. Parekh's appointment comes at a time new services and software contribute to around 11 per cent of Infosys's revenues.

While new services include the cloud ecosystem, cyber security, Internet of Things, engineering services and others, the new software space comprises products such as Edge, Nia, Panaya and Skava.

"Salil Parekh comes with strong skill sets and experience. At a time when traditional services are getting commoditised, companies like Infosys need a new set of services such as cloud to be added to its portfolio. Parekh has experience in cloud and new technologies. He may continue with some of the initiatives undertaken by Vishal Sikka, though there will be some modifications. Parekh will have his own strategic direction and we will have to see how its shapes out," Sarabjit Kour Nangra, vice-president (research- IT) at Angel Broking, told The Telegraph.

Parekh, who was with Capgemini for 25 years, will have his work cut out at Infosys. The domestic IT services sector has been facing challenges such as pricing pressures and volatility in global IT spending. There are challenges specific to Infosys as well.

It remains to be seen how Parekh and the other board members of Infosys deal with the new capital allocation policy at the company. One of the criticism against companies such as Infosys has been that they have been sitting on cash and not returning it to shareholders. However, in April, the board of Infosys set aside an amount of Rs 13,000 crore to be paid to shareholders in the current fiscal and its buyback programme commenced last Thursday.

The challenges

"There are certain challenges related to the company that he will have to face. Parekh will have to move Infosys out of issues such as corporate governance which have hounded it in the recent past. He will also have to tackle attrition and ensure that the current top management is intact. His arrival may lead to some senior management officials leaving the company," an analyst said.

Reacting to the appointment, Shriram Subramanian, founder & managing director at InGovern, a proxy advisory firm, said while the appointment was welcome, it should not lead to founders micro-managing the company.

"I don't expect dramatic changes at Infosys with the new appointment. The world is moving towards new services such as artificial intelligence. However, Parekh should be given a free hand by the founders," he added.

Market circles pointed out that Parekh's appointment was likely to reflect favourably on the stock when trading resumes on Monday.

Murthy happy

Infosys founder N.R. Narayana Murthy expressed satisfaction at the appointment of Parekh. "I am happy that Infosys has appointed Salil Parekh as the CEO. My best wishes to him," Murthy said in a brief statement.