The cloud hanging over Infosys ever since its founder and first chairman N.R. Narayana Murthy added his voice to the doubts being raised over two governance issues – acquisition of Israeli automation firm Panaya and the severance pay of the former CFO – will now hopefully be lifted.
Nandan Nilekani, the other partner of the iconic founding duo brought in to oversee the investigation into the allegations, most aggressively articulated by an anonymous whistleblower, has been forthright in airing his findings. The board under his leadership has said it “reaffirms the previous findings of external investigations that there is no merit to the allegations of wrongdoing.” Reassuring all stakeholders over the future, Nilekani has himself asserted he and the board “will deal promptly and decisively with any governance issues should they ever come up in the future.”
Hopefully, the management and the board will not be distracted any more from pursuing the basic task of running the company in a way in keeping with its former stature of being an industry bellwether.
Of course, all’s well that ends well, but the issue that Murthy will face before the public is: What was all this in aid of? Why did he add his weight behind allegations that have now been declared to be unfounded, not once but twice – first by the external investigations and then the board under Nilekani going over the whole process again?
What is most significant is that the board under Nilekani has turned down Murthy’s demand that the report of the external investigations be made public. This buttresses the point made earlier that placing the report in the public domain would have amounted to going back on promises of confidentiality which had been made and would have had the most negative impact on the need to ensure the highest standards of governance by dissuading future whistleblowers.
The further question this raises is that in view of the final denouement, what made Murthy do what he did. He is not an innocent and knows the real world in which he himself so successfully lived. His concerns for high standards of governance are well known and appreciated but so are the reputations of external investigating professionals, independent board members and, last but not the least, former chairman R. Seshasayee. The only conclusion that can be drawn from all this is that Murthy allowed his opposition to Seshasayee to become obsessive.
Even more fundamentally, having had a great innings, Murthy did not know when to let go, retire with grace and let the shareholders mind the interests of the company according to their best judgement. It should be deeply disturbing to him that after having stood up for good governance so aggressively, he now stands accused of undermining shareholder democracy by seeking to exercise undue influence as a founder.
Before we can look ahead there is a need to look back and see what damage the long drawn out controversy has caused Infosys. The world of information technology is being made to stand on its head by new technology and for Infosys to retain its former preeminence it is imperative for it to technologically transform itself.
Vishal Sikka, who has quit as CEO because Murthy would not allow him to function in peace and with concentration, was ideally suited to hand-hold Infosys as it reinvented itself technologically. Not only is his loss enormous, the tumult that made him quit has caused the company additional damage.
It has been said that Sikka turned out to be a great chief technology officer and not quite the ideal CEO. If that be the case, the situation could have been differently handled. Someone else could have been elevated to handle some of the non-technology tasks of a CEO while Sikka devoted himself to the task of technologically reequipping the company while remaining the official CEO. He was obsessed with bringing in new technology and there is no evidence to suggest that he would have been opposed to this kind of arrangement.
The Infosys board is still some distance away from identifying a new CEO. It will not be surprising if this task takes long and proves to be quite arduous. This is because it will be difficult to find a person who can return Infosys to its former position of being the most admired Indian IT company. TCS has occupied that position quite convincingly and will do everything to remain there.
In fact, even before enabling the company to retain its old unequalled brand positioning, the new CEO will have to help the company pick itself up in daytoday performance. As the latest revision downwards of the guidance for the current year indicates, Infosys is having a tough time even putting in a credible performance in today’s adverse industry environment. Nilekani and the board have a herculean task in finding a new CEO who will be able to deliver on both counts.
Subir Roy is a senior journalist and the author of Made in India: A study of emerging competitiveness (Tata Mcgraw Hill, 2005) and the forthcoming Ujjivan: The microfinance frontrunner (OUP).