Infosys must act fast to control damage
The acrimonious exchanges between the just-resigned CEO and managing director of Infosys, Vishal Sikka, and the board of directors on one side and chairman emeritus Narayan Murthy, the co- founder of the company, is reminiscent of the ugly spat between Cyrus Mistry and the Tata Sons management, principally Ratan Tata, last year after Mistry was given the marching orders as chairman of Tatas Group. In the current case, Sikka has quit rather than being booted out and there is no apprehension of a court battle as was the case with Cyrus Mistry. But the two cases are akin in so far as dirty linen which should ordinarily remain in the closet is being washed in public. While the public spat in the Mistry-Tatas case has abated, in Sikka’s case it has only just begun and needs to be contained before it gets worse. Blaming a "continuous stream of distractions and disruptions" for his decision to quit, Sikka said these attacks had become increasingly personal and negative. Sikka, who had joined Infosys in August 2014, said these distractions were preventing the management's ability to accelerate the company's transformation. While he didn't detail out these "distractions", some of Infosys founders, including N R Narayana Murthy, had alleged corporate governance lapses at the firm and questioned the high compensation paid to Sikka and severance package extended to certain former executives.
Narayana Murthy said in a counter statement that he is not seeking "any money, position for children, or power," while expressing anguish over the board's allegations that his "continuous assault" led to Vishal Sikka quitting as CEO. Murthy, who has been in a long-running battle with the board and top management of the company he founded with six others over three decades ago, said his concern primarily was the "deteriorating standard" of corporate governance at Infosys. He also questioned the investigations that cleared the technology major of all charges of mismanagement. Rebutting Narayana Murthy’s statement the Infosys board in a scathing attack on him, blamed his "continuous assault" as the primary reason for Vishal Sikka quitting the company. In a strongly worded statement, the country's second largest software services firm defended Sikka's performance saying under him, Infosys has delivered profitable revenue growth. The Board alleged that a letter authored by Murthy "has been released to various media houses attacking the integrity of the Board and management alleging falling corporate governance standards in the company". "Murthy's letter contains factual inaccuracies, already- disproved rumours, and statements extracted out of context from his conversations with Board members," it said.
The spat has indeed turned ugly and if the damage to the reputation and bottomline of Infosys is to be contained damagecontrol must follow without delay. A confirmed successor to Sikka needs to be found post haste with impeccable credentials. Already, the stock market has reacted strongly to the events at Infosys. If the slide in the market is to be at least reversed, the company’s bosses will have to respond to the situation quickly and wisely.