Infosys seeks CEO ready to enter war between board and founders
bangalore — Infosys Ltd begins the search for a new chief executive officer this week with a tough set of requirements for any candidate: The person must be capable of leading a 200,000 employee organisation, willing to tackle sweeping changes in the outsourcing industry and brave enough to drop in the middle of open warfare between the company’s board and co-founders.
The bedlam cost the company its current CEO, Vishal Sikka, who said on Friday he would step aside after escalating criticism from the cofounders over his compensation and strategy. The board defended Sikka and took the highly unusual step of calling out by name ex-chairman Narayana Murthy for what they called his “inappropriate demands” and destructive involvement. The billionaire responded with a dire warning that he would respond “in the right manner” in the future.
The open hostilities will make it difficult to draw top candidates from outside the company and likely increase the chances an internal executive will be elevated to CEO. The Bangalore-based company, India’s second-largest outsourcer with more than $10 billion in revenue, also faces deep business challenges, from slowing growth and automation to hostility from the Trump administration in its most important market.
“It’s a tough one,” said Ashutosh Sharma, the New Delhibased vice-president and research director at Forrester. “They’ll find it hard attracting global talent of Vishal Sikka’s calibre.”
Fifty-year-old Sikka, a PhD in computer science from Stanford
Beyond the loss suffered due to Sikka’s resignation, the way the board handled the issue was even more damaging Sudheer Guntupalli, Analyst at Ambit Capital Pvt
University and the former chief technology officer of SAP, is credited with fostering innovation at the company, stemming attrition, boosting margins and pulling in a growing roster of large corporate customers. He helped increase Infosys’s revenue by about 25 per cent since taking the helm three years ago.
Shares fell as much as 4.6 per cent on Monday, after dropping 13 per cent on Friday and wiping out $3.5 billion of market value when Sikka’s departure was announced. The latest slump comes despite the benchmark BSE Sensex rising and a $2 billion share buyback the company announced over the weekend.
At least nine brokers downgraded their ratings on the stock after the CEO news, with just one lifting their recommendation.
“Beyond the loss suffered due to Sikka’s resignation, the way the board handled the issue was even more damaging,” said Sudheer Guntupalli, an analyst at Ambit Capital Pvt. His firm has put its rating under review, citing factors including corporate governance, succession planning and the prospect of a class action lawsuit against the company in the US.
Infosys has little time to waste in choosing a successor. Among the internal frontrunners are Pravin Rao, a long-time Infosys hand named interim chief executive on Friday, and chief financial officer Ranganath D. Mavinakere. Ranga, as he is known, has been at Infosys for over a decadeand-a-half and holds a degree from the high-profile engineering school, the Indian Institute of Technology, like the founders Murthy and Nandan Nilekani. The boyish-looking Ranga, 55, who worked closely with Murthy during his second stint as Infosys chairman, may also be able to navigate the tensions between the board and co-founders. At Friday’s press conference, Sikka praised Ranga and highlighted his role in improving cash holdings to more than $5 billion.
“Talented candidates will hesitate,” said Sharma. “They’ll wonder how much autonomy they’ll get as CEO considering all that’s happened.”