Founders, management must work together
Vishal Sikka, the chief executive officer of India's second-largest Information Technology services company, Infosys, finds himself in the middle of a corporate controversy. Sikka was handpicked by the company's legendary co- founder and former chief executive and chairman NR Narayana Murthy, in June 2014. Murthy, who had taken over the reins of the company for the second time in 2013 — after a troubled few years of Infosys, and having tried and failed to reinvent it, as the IT services industry went through dramatic changes — found Sikka as the ideal candidate to deliver success back to the Bangalore-based firm. Sikka's appointment was seen as the return of the prodigal, the son of an Indian Railways officer who had gone on study at Syracuse and Stanford in the United States before becoming the chief Technology Officer of German infotech firm SAP, he was another Indian who had made it big in infotech. Infosys, in the early part of this decade, was in a funk.
Changes had come in the way IT services outsourcing was conducted, along with dramatic shifts in the way people consumed technology. Infosys was also India's ‘original' start-up, its co-founders, including Murthy, Nandan Nilekani and S Gopalakrishnan had taken turns in running the company. However, as the founders’ stake became diluted over the years since the company turned public, large institutional investors believed that an outsider would bring in fresh ideas. Since Infosys, like many prominent listed companies, suffers from the curse of constantly needing to deliver good quarterly results, with Sikka's first few quarters, it seemed like Murthy had found the perfect successor. Yet, as the years passed, it appeared trouble was brewing between the founders and Sikka particularly with regard to some decisions that the latter had taken. For instance, the acquisition of an Israeli software firm for $200 million in 2015. The subsequent resignation of Rajiv Bansal, the chief financial officer of Infosys and his generous severance package too came under question. Murthy hinted that such large packages were like ‘hush money' to buy silence. This, coupled with the large pay packet Sikka got, brought Murthy, along with Nilekani and Gopalakrishnan, into conflict with the board.
While Sikka and Murthy have consistently stated in interviews that they maintain a cordial and friendly relationship, it is clear that the billionaire founders who collectively hold about an eighth of the company, believe the board has failed in its fiduciary duties. But while Sikka's position has been weakened by the founder's attack, the head they really want is that of R Seshasayee, former Ashok leyland managing director and now chairman of Infosys' board. And it isn't just the co-founders but several other high-profile former directors such as TV Mohandas Pai, who have questioned Seshasayee. There has been no response from Infosys on the allegations of falling levels of corporate governance, but the schism between the founders and the current management of one of India's largest and highly-traded companies is not a good thing. It could damage the Infosys brand. This is not what either Murthy or Sikka wants. The founders, the management and the board should meet soon to clear the air.