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Will Nandan Nilekani finally resolve the management void at Infosys?

As Infosys readies itself for the arrival of Nandan Nilekani after a nine-year hiatus, let’s look at the several things that have led to this situation.

As of now, Nandan Nilekani has been appointed as the non-executive Chairman of the Board. With this, the current board members R Seshasayee, Vishal Sikka, Prof. Jeffrey Lehman, and John Etchmendy have resigned. Ravi Venkatesan will step down as Co-chairman but will continue as a board member.

With Nandan returning to the helm, everybody is predicting good days for the company again. However, those who have tracked the company know that the last five years have seen internal management bouts plaguing the company. Hopefully, it will end with Nandan steering the company to a position of strength before a new CEO takes over the beginning of the next financial year.

Nandan Nilekani

To begin with, the management conflicts began during the tenure of S D Shibulal, the last founder who took over as CEO in 2011. He introduced the “New Normal” or the 3.0 program, which was supposed to usher in an era of platforms business and agile computing over the traditional application development and maintenance business.

However, Narayana Murthy returned as Executive Chairman in June 2013, briefly, stating that Infosys was losing some key accounts and the company needed him to find a successor to the founders who were retiring from actively running the company. At the time, there were exits of several senior leaders, at least 10 of them, which was well documented. Murthy’s return in 2013 was hailed by several experts. They believed Infosys needed a strong leader like him and that he alone could find a personality that could boldly guide Infosys into the future.

Unfortunately, even after appointing a strong leader like Vishal Sikka with such fanfare the same thing is happening all over again at Infosys. The founders seem to be coming back again. Is this a right thing? At least 84 ex-Infoscions believe so. These are senior leaders that include the likes of Sharad Hegde and Vijay Ratnaparkhe who have written a letter to the board saying that, "The board needs to explain in depth, backed by facts and data, the issues raised by Murthy, and come clean to all stakeholders." They have also stated in the letter that, "We, a group of ex-Infoscions, want to express our deep disappointment and anguish at the manner in which the board has responded to Murthy in the form of a letter last week to stock exchanges." Also remember, a lot of these people were early employees at Infosys who saw the company grow into a services behemoth and several of them also held stock in the company.

In the end, it seems like Infosys is not struggling as a company, but is being hurt by the internal strife in the management.

What is the market saying about Infosys?

The market though is reacting differently. A bunch of stock brokers in Mumbai are calling their clients and asking them to sell the Infosys stock. “You will get the cheque immediately,” says the stock broker to his client. He tells YourStory that he predicts a few possibilities over the current tussle between the founders, mostly Narayana Murthy, and the board. It is quite obvious now that Nandan Nilekani will return for a short period till they find a CEO who can steer Infosys into the digital era. The broker says either the company may merge in the future with another large IT Services firm (and he believes it is the best stock to buy) or they may find a CEO who will have to constantly watch his back with a lot of pressure from the Chairman Emeritus, Narayana Murthy, and the stock will continue to rally on current levels. While this is the view of a stock market broker, there is a larger corporate agenda at the backdrop. The appointment of Nandan Nilekani will at least bring back confidence to the stock markets for the short run.

Sources tell YourStory that the current situation at Infosys is like discovering several pages from the 'Game of Thrones' book in which the characters playing the “Hand of the King” get murdered. In this case Seshasayee and other members of the board, who have exited the company. Now that the board has brought in Nandan Nilekani, which analysts say, is the right thing to do, it would be interesting to know how he fixes the company and exits quickly as soon as he discovers the new CEO. “Nandan will not stay long and he is not emotional about things. He will find the CEO and move on. The new CEO will have to steer along with some legacy,” says a source.

The politics and low morale in the company

In this backdrop, the confidence of employees and other shareholders will only be restored if the founders put in a joint statement on what they expect from the company. It is clear that Murthy is going to come out on top because Nandan will be steering the ship for a short time. Infosys has larger problems to address and has to restore employee and client confidence.

A couple of months ago, Vishal Sikka had told his employees not to be distracted by the accusations relating to Panaya. His resignation raised a lot of doubts about the years of goodwill that the company has managed to build. However, there are several who still believe the founders should run the company and Murthy is revered by many, going by the letter sent by ex-Infoscions, for his image of simplicity. Nobody really knows what is going to happen to Infosys, but at the outset, it must not lose its sheen as the doyen of Indian IT. However, all thanks to current developments and allegations over lack of governance, it has lost a lot of its reputation. It is time to rebuild and there is no better man than Nandan.

About the author

Vishal Krishna is a Business Editor who writes about the economic and social issues relevant to the development of India. At YourStory he networks with colourful folks that build a nation through startups, small business and large corporate. He is also a closet guitarist and a sports fan.

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