With Murthy, Will New CEO Just be a Statue?

The Economic Times - - Front Page -

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.

In In­dia,

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