A string of brokerage houses on Monday called NR Narayana Murthy's return to Infosys as a positive for the company, but they do not expect a quick turnaround in the fortunes of India's second-largest IT services exporter. Many feel the changed circumstances in the IT world may not make things easy for Murthy despite his vast experience.
Murthy had headed Infosys at a time when the Indian IT industry was going through a boom, till around 2006. Since then, the global economic meltdown had cut into IT spends the world over, and even tier-I clients cut down on their discretionary spends besides demanding price discounts — something that Murthy never had to deal with.
BNP Paribas in its note on Monday said, “We believe investors are likely to see the step as reassuring given the recent volatile results, and the stock could react positively, at least in the near term. But we note the jury is still is out on whether Murthy’s return will be able to address Infosys’s growth and margin challenges, which we believe are further complicated by the proposed immigration reforms in the US.”
In his second coming, Murthy is believed to be interested in expanding his US and Europe teams soon while also taking direct control of the company's M&A team. He has already told his immediate team members at Infosys to become a more client-facing entity.
Ray Wang, CEO of US-based research house Constellation Research, said, “On the one hand, NRN left his mark on many of his key disciples who have been in charge. On the other hand, the conditions have changed so much in the industry that one may wonder if one man can bring around the changes required to turn the tide. Infosys shareholders hope for a Steve Jobs-esque miracle. Yet, the odds are low based on history.”
Barclays was more specific in their Monday note. “While the focus of the company should remain on longer term growth, we hope that it also focuses on