With Murthy, Will New CEO Just be a Statue?
out absolute executive powers for another 3-5 years,” he added. So will founder NR Narayana Murthy, who was appointed to a five-year term as chairman in June last year when he was recalled, relinquish his executive role before then? “I do not think that’s an issue, and knowing him, I am sure he will go, but only after being fully satisfied that the new leader is capable,” added a second source.
Infosys declined comment for the report. US-based Development Dimensions International, a specialist in executive evaluations, has presented the nominations committee of the board with a slate of internal candidates. Executive search firm Egon Zehnder is readying a shortlist of external candidates. On Tuesday, ET reported that the Infosys board has finished evaluating eight internal candidates, including Srinivas and UB Pravin Rao, a president overseeing most of the delivery operations. The company is now awaiting a list of external candidates from the search firm. For his part, Murthy has focussed attention on driving up sales growth by competing aggressively for bread-and-butter outsourcing deals while reducing costs to improve the bottom line. For 2013-14, Infosys has forecast revenue growth of 7-9%, much below the 13-15% export growth prediction for the industry. Murthy’s over-arching influence on a company he calls his “middle child” has the potential to inhibit executives who may otherwise believe that heading India’s second-largest software firm is an attractive proposition.
“In Infosys, NRN is a larger-than-life figure. If you go to Infosys main reception and you are supposed to meet NRN, the reception you get is completely different from what you get if you have to meet any- one else, including the other founders,” said Rishikesha T Krishnan, professor of corporate strategy and director at IIM-Indore. He added that this debate about whether or not to have an executive chairman above the CEO is a big issue in corporate governance.
“Most governance purists prefer a nonexecutive chairman, but several companies including well-known US ones, have an executive chairman,” Krishnan said.
In India’s over-$100-billion IT industry, this debate also means a growing divide between leaders and laggards. While growth leaders Cognizant and Tata Consultancy Services don’t have executive chairmen, laggards including Wipro and Infosys have founder executive chairmen at the helm. And for any new person joining from outside, working with a dominant executive chairman can be a huge distraction.
At least one candidate who was contacted by Infosys expressed apprehensions about working under “a very active exec- utive chairman and founder”. But sources said Murthy could relinquish an executive role sooner than planned if the candidate is strong enough. “Infosys has dug itself into a hole,” said the head of a Bangalore-based executive and staffing firm. “They have got Murthy back for five years. Now which external CEO would like to play the role of interim CEO for more than three years and then only expect to become a full-fledged CEO?” he asked.