‘Ideal if new CEO is close to Murthy’

A replacement for Vishal Sikka, the first non-founder to become the CEO and MD of Infosys, must be an internal candidate who has risen up the ranks and is favoured by co-founder N.R. Narayana Murthy, industry analysts said.

Mr. Sikka, Stanford-educated and former SAP AG executive, resigned on August 18 citing what he termed “baseless, malicious and increasingly personal attacks” by the founders of India’s second-largest software services exporter, led by Mr. Murthy, that had constrained his ability to foster change.

“The confidence on an external candidate is very low now,” said Sanchit Vir Gogia, founder & CEO of Greyhound Knowledge Group, a global strategy and transformation firm. “Also, chances of top-notch leaders trying to join the company is also very low. The Sikka episode has wiped out $3.5 billion of shareholder value yesterday [August 18]. They cannot afford another botch-up. It will be wise to have an internal candidate who knows the system well enough.”

“They may not look for a forward-looking CEO. Instead, they may look for a CEO who can buy into the strategy of the company and its culture. They will look for one to stabilise the operations. A person such as a COO may be promoted to CEO. To prevent another such episode, they will look for a candidate aligned with Murthy.”

Mr. Murthy had recently raised issues of corporate governance and salary increases paid to Mr. Sikka and COO U.B. Pravin Rao. Mr. Murthy had also sought that a probe report on alleged irregularities over the $200-million acquisition of cloud solutions start-up Panaya, be made public.

Dinesh Goel, formerly partner and head of India for ISG, a U.S.-based Nasdaq-listed technology research and advisory firm, echoed Mr. Gogia’s views and said a candidate within the organisation would have to be close to Mr. Murthy.

‘Candidate from within’

“The main requirement now is for the candidate to have a greater degree of sensibility in managing critical shareholders, including founders,” Mr. Goel said. “An internal candidate will lack a larger perspective of the industry but will be tuned to the company’s culture. The person will have to go back to the drawing board without sacrificing the strategy laid down by Sikka. Any paradigm shift from the core values of the company will not work now.”

Co-chairman of the board, Ravi Venkatesan on Friday ruled himself out of the race, The other senior management officials include U.B. Pravin Rao, the interim CEO and MD, M.D. Ranganath, CFO, Ravi Kumar, deputy COO, Mohit Joshi, head of financial services and healthcare and Sandeep Dadlani, head of manufacturing and retail business.

Shriram Subramanian, founder and MD, InGovern Research Services, a proxy advisory firm, said the Infosys board needed to “go back to the drawing board.”

“It is not that an outside CEO did not work. Sikka was Mr. Murthy’s choice. The crux of the issue is the conflict between the board and Murthy,” he said.

“So the present board will have to go. A new-looking board needs to take its place with the help of the founders. One solution is to let the founders propose the constitution of the board. Even then the shareholders will have to agree. The resignation of Sikka has achieved nothing as the uncertainty continues.”

“One way forward is to recruit a candidate which both parties agree to. Else, we are facing a situation where both parties land up in courts.”

Link: Hindu – 19 Aug 2017