With founder chairman Nara-yana Murthy logging out of Infosys on Friday evening, the company is sure to wear a poorer look. How much poorer it may look, only time can tell. Part of that answer rests in the lockers of a banker named KV Kamath, who will take over as chairman from August 21. Together with co-chairman Kris Gopalakrishnan and new CEO SD Shibulal, two of the company?s founders, Kamath will have the arduous task of getting India?s second-largest software exporter out of the logjam that it finds itself in.
In the past few quarters, Infosys has consistently missed analysts? expectations, while often surpassing its own conservative guidance numbers. Market-watchers have been quick to pounce on this and many now believe that Infosys has lost its golden touch and are pointing towards the widening gap with TCS. Cognizant too is catching up, they say. But the fact is that Cognizant is an American firm and hence does not merit comparison with Indian firms. And TCS has always believed in low-margin play that has helped it win more deals.
Infosys, on the other hand, is the industry leader on the margin front, often settling for deals with a 25-30% margin. While TCS too has raised the bar now and has started competing with Infosys in margin play, it would be far too premature to say that Infosys is at a crossroads.
With Kamath at the helm, one thing is guaranteed: There is bound to be more aggression in the board room. And that could mean a big-ticket acquisition around the corner. For far too long, Infosys has been extremely conservative when it came to exploring the inorganic route. Kris and Shibulal have come in for severe criticism on account of this. But the company may not be able to resist an acquisition for too long now. The time is ripe for the pluck, and the company has over $3 billion in cash reserves. Kamath may pull the trigger. And Murthy is just a call away for any sound advice.