The Telegraph
Friday , June 13 , 2014
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Infosys learns UPA’s lesson
- Murthy to step aside, son to exit and outsider to be CEO

June 12: Infosys has stuck to its core beliefs: it doesn’t intend to perpetuate dynasties.

Nor does it believe in emasculating the chief executive by erecting a dual power centre structure.

It’s an idea that brought about cataclysmic change in the arena of politics last month; and it will underpin the game-changing move that the country’s second-largest software exporter made on Thursday when it broke with tradition and picked Vishal Sikka — a complete outsider — as its new chief executive and managing director.

Sikka (47), a Punjabi who grew up in Vadodara before going on to obtain a PhD in computer science from Stanford University, will have the task of shaking things up at Infosys.

The $8.4-billion software giant fell behind its peers as a tough economic environment badly crimped margins in the past few years, which forced chief founder N.R. Narayana Murthy to come out of retirement in June last year and wield the whip once again. The new CEO will take over from incumbent S.D. Shibulal on August 1.

Sikka will have a tough task ahead of him as he tries to win back the trust of clients and stem the exodus of top talent that has engendered a climate of fear and uncertainty among the 160,000-strong workforce.

The dynastic element — which had crept in when Murthy brought in his son as his executive assistant fanning speculation about the latter’s role — flew out of the window when it was announced that Rohan Murthy, a PhD in computer science from Harvard, would step down on Saturday even as shareholders congregate in Bangalore for their annual meeting.

It was not immediately clear where Rohan would go. But he doesn’t need to fret over a new job: he holds 79.5 lakh shares in Infosys worth over Rs 2,517 crore at Thursday’s closing price of Rs 3,616.60 on the Bombay Stock Exchange.

The concept of a dual power centre — an idea that Infosys briefly flirted with — crumbled with the announcement that Narayana Murthy and S. Gopalakrishnan, the two founders, would voluntarily step down as executive chairman and executive vice-chairman, respectively, on June 14.

While they will continue on the board till October 10 as the non-executive chairman and non-executive vice chairman, respectively, to facilitate a smooth transition of responsibilities, Shibulal, who was one of the six promoters of Infosys, will step down as CEO and MD and from the board on July 31.

More important, in a few months from now, there will not be a single founder who will have an executive role in the company.

Murthy will become the company’s chairman emeritus on November 11, reverting to a position he assumed after retiring in August 2011. “Other than the title, I will have no responsibility, no authority and no obligation at all to Infosys,” Murthy told reporters at a media conference held at the Infosys headquarters in Bangalore.

“The resignation of Murthy is positive because it gives Sikka a free hand to the run the company with no dual power centres,” analysts at Nomura Securities said in a note.

Sikka’s biggest challenge as Infosys CEO will be to rebuild a core management team that will fill the leadership vacuum created by the exodus of senior executives that began last year after Murthy and his son started aggressively questioning the decision-makers in the company, axing costs and tearing up fiercely protected executive turfs.

The appointment of an outsider as the chief executive could trigger another exodus. At least 11 senior executives have left the company since June last year. Just last week, the company’s senior vice-president and global head of strategic sales, Prasad Thrikutam, resigned. Earlier, president B.G. Prasad — who was once seen as a front-runner for the CEO’s post — had quit in May.

To ensure continuity, the Infosys board has decided to elevate U.B. Pravin Rao, president and whole-time director, as the new chief operating officer. He will take over on Saturday.

Murthy said: “His (Sikka’s) illustrious track record and value system make him an ideal choice to lead Infosys.”

“Vishal brings valuable experience as a leader of a large, global corporation,” added Murthy.

Sikka said he looked forward to working with and learning from his new colleagues. “Computing technology is reshaping every industry across every walk of life. We, at Infosys, have a unique opportunity to deliver breakthrough solutions that will bring greater value to our clients, employees, investors and other stakeholders,” he added.

At SAP, Sikka was responsible for on-site and cloud-based platforms and applications, especially real-time data platform HANA which helps clients to derive meaningful insights from mountains of data faster and at a lower cost.

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