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Editorial: Exodus at Infosys

Dec 23 2013, 19:02 IST
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SummaryAn energetic CEO, from outside, may be what Infosys needs

The departure of V Balakrishnan, a director on the Infosys board and the chairman of Lodestone, is a blow for the IT major coming as it does on the back of several other high profile exits. Just about a month back, Stephen Pratt, head of the US utilities and resources put in his papers and before that Ashok Vemuri, a member of the executive board moved on. Balakrishnan’s is the fifth high profile exit from the company since NR Narayana Murthy returned as executive chairman in June, given Basab Pradhan, the global sales and marketing head and Salil Chaturvedi, who headed the financial services piece in the US, have also left. Balakrishnan’s leaving comes as a bit of surprise because he was understood to be close to Narayana Murthy and, therefore, a potential CEO candidate. Indeed his chances of making it to the top job had appeared to have brightened considerably after Vemuri’s exit. Murthy’s task is now tougher with so many members of his top team not there to help him bring back the growth momentum that Infosys once enjoyed. While it’s possible there’s enough talent within and in the industry and that it may be possible for others to take their place, there’s no doubt such an exodus will mean a setback, even if it’s a small one.

That’s a pity because Infosys seemed to be getting back on track; in Q2FY14, margins were disappointing since they were flat sequentially net of a one-time payment for visas but the volume growth of 3.1% was reassuring. Murthy’s restructuring plan is a three-pronged one aimed at optimising costs, especially on-site through better utilisation, rejuvenating the sales team and putting in place systems and processes that will help bring down costs over the longer term. While much of this should be achieved, it would be par for the course. For Infosys to be able to beat the competition consistently and get back the edge it once enjoyed, a stable top team is a must; Murthy simply can’t raise the bar without some experienced hands on board. Infosys has always believed in promoting insiders, a good model, since it reassures employees that their aspirations will be taken care of. However, if the need of the hour is some fresh blood, then it’s perhaps better to get some—a young and energetic CEO capable of building a team is possibly what the company needs.

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