Infosys has been under-performing in the information technology industry over the last couple of years and if its guidance for the current fiscal is to be believed, it will grow at just about half the pace of that of the entire industry.
When a company dusts off a long-retired founder chairman and brings him back into an active management position, it can mean only one of two things. Either that the situation is desperate and the company badly needs the experience, equity and goodwill of the founder to steady the ship, or that it is unable to attract equivalent talent from outside. In the case of Infosys, where iconic co-founder, N.R. Narayana Murthy, is returning as Executive Chairman with immediate effect, it probably means both. Infosys has been under-performing in the information technology industry over the last couple of years and if its guidance for the current fiscal is to be believed, it will grow at just about half the pace of that of the entire industry. This is indeed a lamentable position for a company that was once the acknowledged bellwether for the IT sector; an industry leader not just in business but also in corporate governance. Today, the company seems to have abdicated both thrones. If the return of Mr. Murthy was a surprise, even more so was the induction of his son, Rohan Murthy, as his executive assistant. Though dynastic succession is accepted in Indian businesses as much as in politics, the fact is that by inducting the son, even if it is as a mere assistant to the father, Infosys appears to have fallen short of the high standards of global corporate governance which it professes to practise.
That said, Mr. Murthy has set himself up for a stiff challenge in his second innings. For one, there has been a sea change in the environment, and indeed in the company, in the two years since he stepped down. He has anyway not been in an executive position since August 2006, when he became non-executive chairman and remained so until 2011. The world has moved on since then and the challenges for the IT industry have multiplied. Second, the circumstances under which Mr. Murthy is returning are bound to throw up their own challenges. It will but be natural for shareholders and employees, including those in the middle-management of Infosys, to raise questions such as if the move is a vote of no-confidence in the present executive set-up, including the CEO, S.D. Shibulal, and the present executive co-chairman, Kris Gopalakrishnan. Will Mr. Murthy reshuffle the executive team and bring in his own managers eventually? Will there be a change in the much talked about Infosys 3.0 strategy that is Mr. Shibulal’s baby? The fact is that, in returning to the crease, Mr. Murthy has staked all his equity, reputation and goodwill and is hoping that he can pull Infosys out of the rut it finds itself in now. Wishing him good luck and desperately hoping that he succeeds will be the market, which is seeing his return as a positive move already.