Crisis at Infosys

India’s $150-billion software industry woke up to a shocking news on Friday. Vishal Sikka, the flamboyant CEO and MD of Infosys Technologies, put in his papers. Infosys is no software minnow. The Bengaluru-based software major, though the second largest IT company after Tata Group-owned TCS, is considered the bellwether for the country’s burgeoning software sector.

Founded by N R Narayana Murthy and six others on a modest scale in 1981, it grew into an IT colossus over the years, employing more than two lakh people now. No doubt, Infosys owes its phenomenal success to the values, ethics and visionary zeal that Murthy has instilled in the software services major. That’s the reason why he has become an icon and the face of the Indian IT.

Incidentally, Murthy, a now minority shareholder, who moved away from the company’s management and passed on the baton to Sikka in 2014, is said to be the reason behind the resignation of Sikka who had been trying to transform the IT behemoth into a new-age tech conglomerate for the past three years. Sikka also put the IT major on the right financial track.

However, Murthy, who along with his family members own just 3.44 per cent stake in the company, expressed his displeasure time and again over the way the company was being run by the new management. He also raised several corporate governance issues.

High severance package of Rs 23 crore to Rajiv Bansal who quit as Infosys CFO, the $200-million acquisition of Israel-based IT company Panaya, and abnormal pay hikes for some executives turned out to be the bones of contention between the illustrious co-founder and the new management led by Sikka.

The last straw was the purported email sent by Murthy to some of his advisors in which he claimed that at least three independent directors on Infosys board told him that Sikka was not a CEO material, but a CTO material. This email was leaked to the media, forcing Sikka to call it quits.

“Over the last many months and quarters, we have all been besieged by false, baseless, malicious and increasingly personal attacks. Allegations have been repeatedly proven false. But despite this, the attacks continue, and worse still, amplified by the very people from whom we all expected the most steadfast support,” Sikka said in his resignation letter.

Infosys board, in a statement, threw its weight behind the outgoing CEO and blamed Murthy’s continued assault on him for his departure. It appointed Vishal Sikka as the Executive Vice-Chairman to oversee the management transition. It also made it clear that there was no proposal from its side to offer any role to Murthy in the company as is being speculated. This public snubbing will obviously hurt Murthy’s image.

Further, Stanford-educated Sikka’s sudden departure has pushed Infosys into crisis. Though U B Pravin Rao, a long-time hand at Infosys with over three decades experience, has been appointed to the positions held by Sikka, it’s not going to be an easy task for Infosys to find a good replacement for the outgoing CEO.