Search for next CEO: It's a tight race to the top at Infosys

Written by P P Thimmaya | Bangalore | Updated: May 26 2014, 14:17pm hrs
SD Shibulal-InfosysInfosys' urrent CEO, SD Shibulal, is last of the founders? group to don the mantle and will be retiring before his term ends in March 2015.
It is a million-dollar question on who will be the next chief executive officer (CEO) of Infosys, as the countrys second-largest IT services exporter with a revenue of $8.2 billion intensely debates whether to pick somebody from within its ranks or bring in a rank outsider.

In its 33-year-old history, Infosyss search for its next CEO is now breaking many new grounds. For the first time, it will be appointing a chief executive who does not belong to the founders group. Secondly, it has amplified the search by publicly announcing the appointment of two external agencies to prepare the groundwork of the probable candidates from within and outside. The arguments for either sideinsider or outsiderremain equally strong for Infosys, as any decision would have a long-term impact. The company has had four CEOs till now and all belonged to the founder-promoter group.

Much before the actual choice has been made, the entire process has created some sense of disquiet.

Partha Iyengar, vice-president and distinguished analyst, Gartner, said, Unfortunately, I think, it is going to be a slippery slope for them till the new CEO comes around and see what strategies they adopt. The challenge is will the market give them that much time. So clearly it is a race between them getting back to some kind of stability and market moving so far ahead that they are unable to catch up at all. That is the challenge and dilemma for them.

The conventional wisdom would have it that Infosys will settle for an internal candidate going by its past history of conservatism in term of management coupled with the companys philosophy of giving insiders the first opportunity. The current CEO, SD Shibulal, is last of the founders group to don the mantle and will be retiring before his term ends in March 2015.

Any internal candidate will be a much safer choice for Infosys as the company is unlikely to face any further disruption in management changes. It could also mean a continuity of its current strategy and 1.6 lakh employees are unlikely to face uncertain times.

They would probably go with an internal candidate for the new CEO as the company and the board would be more comfortable with such a choice, according to a person familiar with the developments within Infosys.

The big plus for Infosys by opting for an internal candidate will be the alignment with its culture which has a major say as the company moves forward. Any disruption in the culture could create certain turbulence.

An external candidate would take certain time to get into the groove of Infosys culture and the IT major cannot afford this luxury in a fast changing technology environment. Such a step would probably put them about two paces behind market development and it could mean a lot of catching up to do.

The shift towards an internal candidate also draws its weight on the NRN factor. NR Narayana Murthy, the chairman of Infosys is now playing the second innings in the company he founded in 1981. Given that company was rapidly losing its edge in a highly competitive race, only Murthy with its stature and a commanding presence in the industry could bring about the much needed stability for Infosys while setting the chart forward.

People aware of about Murthys style of functioning feel that new CEO will have to work in very close tandem with the chairman and a insider would be a better choice. Murthy during a investor call also emphasised that Infosys would continue with its current turnaround strategy and there is unlikely to be any major tweaking.

On the other hand, there are also enough arguments on the need for an external CEO. A former top executive of Infosys said, Picking a CEO internally would mean the continuation of the existing management mindset which does not augur well for the company going by the track record in the last two years.

Industry observers believe that the Infosys company would better off in taking the risk of appointing somebody from outside as it would lead to fresh thinking, which the IT major probably requires to rev up its engine.

Infosys under Narayana Murthy cannot get it wrong for the second time unlike in the selection of the previous CEO. Any wrong choice would mean further damage for the company, said another person.

In the present circumstances when Infosys is struggling to achieve industry leading growth and challenges on all front be it sales, delivery or image management, there is a view that the company would require somebody with a strong sales expertise to the take IT major forward.

The existing management does not have anybody with strong sales credentials. Infosys needs an outsider with such capabilities to pull itself out of current mess, the person said.

The CEO position at Infosys is almost a rockstar-like status in the Indian IT industry and the company could look at the possibility of hiring an executive from outside to meet these credentials.

The entire process of selecting the CEO could take some more months for Infosys and it would keep a lot of people on a curious watch to see what will be the choice that is made.