The Infosys lesson for India Inc

Infosys chooses an outsider pro to lead it through transition.

seema

Seema Sindhu | July 7, 2014




Infosys Technologies, a bellwether firm for India’s infotech sector that is making waves across the globe, has defied the traditions of the domestic sector at the best of times. So, as it goes through a transition, it has continued to set what could be new trends.

On June 12, its executive chairman NR Narayana Murthy decided to step aside, and the company named Vishal Sikka as its CEO. What was significant is that the baton was passed on to an outsider professional for the first time since the company’s inception in 1981.
A group of IITians – Narayana Murthy, Nandan Nilekani, NS Raghavan, S Gopalkrishnan, SD Shibulal, K Dinesh and Ashok Arora – who founded the company have taken turns in various roles in running it, but in the face of mounting challenges decided to let the former SAP chief technology officer do the job.

Also read: Sikka at helm, it's time to hit the Refresh key at Infy

During Narayana Murthy’s second term his son Rohan Murthy was appointed his executive assistant, triggering speculation over his future role. At most other Indian firms, Rohan’s further elevation might have been taken for granted, but at Infosys, he will be moving out now that his father is only a non-executive chairman.

Analysts believe this could be a fresh start for Infosys.

Sanchit Vir Gogia, chief analyst and CEO, Greyhound Research, says, “I believe India Inc is moving up the ladder to add value to their business. A business needs a team of leaders; it cannot be run by one person. The leader needs to be professionally sound to lead the company. I see the baton moving from family to professionals with a business sense.”

Harish Bijoor, brand expert and CEO, Harish Bijoor Consults Inc., concurs, “This surely is the trend. Founders and owners reach a glass ceiling all their own. This glass ceiling occurs at different points of time. In the case of Infy it has taken 33 years. This should have happened earlier.”

Although there have been instances of professional CEOs in family-run enterprises, for example at Dabur, Thermax, Jindal Steel and Power, Wipro and some of the Tata Group firms, “Vishal’s appointment is a learning that various other companies will implement in the coming years. Innovation is the key that every company needs to remember. It should be the core competency of any company,” experts believe.

While some look at it from the perspective of an insider-outsider debate, others say the appointment should be seen purely in business sense.

Ganesh Natarajan, vice chairman and CEO, Zensar Technologies, says, “India Inc is run by an assortment of CEOs – some are from families and many are independent professionals. I do not think the second- or third-generation family CEOs are in any way inferior to professionals and every board and shareholder group should look at the CEO appointment on individual merit.”
As for Sikka, there is unanimity in industry that he is a true innovator and thought leader, and that his contributions at SAP have been extraordinary. Experts feel if Sikka can deliver and give a new vision to Infosys, many family-run firms too may consider bringing in professionals at the top.

“I believe it is only a matter of time that these companies consider getting a professional rather than passing on the baton to the next family member,” says Gogia.


(This story appeared in the July 1-15, 2014 issue of the print issue)

Comments

 

Other News

How RTI could have prevented the PNB fraud

The Right to Information (RTI), used efficiently, could have helped activists and bankers expose irregularities much before they snowballed into full-fledged scams – the one at Punjab National Bank (PNB) being only the latest example. That is the argument coming from Shailesh Gandhi, f

PNB’s viability rating hit

The large-scale fraud perpetrated on Punjab National Bank has hit its rating. Fitch Ratings has placed its Viability Rating of `bb` on Rating Watch Negative (RWN). The rating firm said it will resolve the Rating Watch “once more clarity emerges on the extent of control failures and the impact on PNB`

Schools for profit

The private sector in education should not be driven by the profit motive alone. Private educational institutions are necessary, but commercialisation of education must be checked. The supreme court struck an optimal middle, allowing private schools to generate reasonable surplus for sustaining themselves

The dirt in the diamond trade

The dazzling diamond trade has been hit hard by the Nirav Modi episode, which saw the billionaire jeweller flee India just before a massive fraud amounting to Rs 11,000 crore was detected at a Punjab National Bank branch in Mumbai. But, Nirav Modi is not the only diamond tycoon who has been

PM lays foundation stone for Navi Mumbai International Airport

PM Narendra Modi on Sunday laid the foundation stone for Rs 16,700 crore Navi Mumbai International Airport. The first phase of the construction is expected to be completed by December 2019. The project is going to be implemented 21 years after it was first proposed. The airport is likely to handle 10 milli

Health groups irked by the SC order on vaccine PSUs

Health groups have expressed their disappointment with a February 12 order of the supreme court, refusing to review or recall an earlier order disposing off a case against the mala fide suspension of the vaccine public sector units (PSUs) and government’s tendency to pamper private sector with public

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter