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Infosys to move centre of gravity back to Bengaluru; won't disclose reports

Murthy's expression of disappointment with the board over the clean chit to Sikka is unlikely to result in the disclosure of probe reports on the Panaya deal and the payout to ex-CFO Rajiv Bansal

BS Web Team  |  New Delhi 

In a snub to Murthy, Infosys gives Sikka thumbs up; cuts FY18 guidance
Infosys Non-Executive Chairman Nandan Nilekani addresses a press conference at Infosys campus in Bengaluru. BS photo by Saggere Radhakrishna

Infosys' second-quarter results saw former CEO Vishal Sikka's strategy getting a thumbs up and it will continue to drive the country's second-largest software services firm. Further, the company's board led by gave a clean chit to Sikka over allegations of governance failure in the Panaya acquisition, with Infosys co-founder on Tuesday expressing his disappointment over the development. (Read more here

While Nilekani, who returned to Infosys in August, has reviewed Sikka's strategy of driving a software plus services model that would bring more non-linear revenue and has retained the former SAP executive's vision, as reported earlier, the company's strategy has seen some changes.

The company's was being seen as the place where its future roadmap was being formulated. However, the Economic Times reported on Thursday that it is now being described as a 'listening post'. According to the financial daily, this development has come about because Nilekani is bringing the IT major's centre of gravity back to Bengaluru. 

According to the report, Nilekani told analysts at a conference call: "We see as a listening post to the latest developments in tech happening in Silicon Valley, in machine learning, AI, deep learning, virtual reality, automated reality, self-driving cars."

Referring to the development, Peter Bendor-Samuel, CEO of IT consultancy Everest Research, told the financial daily that the move was "likely to improve morale and execution" in the short run. However, he added that it was unclear how a "leadership team steeped in the existing industry model" would be able to lead Infosys "into a leadership position in the digital marketplace".  

As reported earlier, former CEO worked out of the Palo Alto centre in Silicon Valley. In May this year, Infosys had announced the opening of four technology and innovation hubs across the United States to serve clients in key industries. (Read more here)

Further, Murthy's expression of disappointment with the board over the clean chit to Sikka is unlikely to result in the disclosure of probe reports on the Panaya deal and the payout to ex-CFO Rajiv Bansal, the Economic Times reported on Thursday in a separate report while citing sources in the know. 

"This is face-saving for everyone. For the board to collectively admit that they have done something wrong is highly unlikely," one of the sources told the financial daily, adding that such disclosures could have led to legal challenges from investors.

As reported earlier, the Infosys board gave a clean chit to the company's $200-million under Sikka, saying there was no merit in the allegations of wrongdoing. (Read more here)  

Gibson, Dunn & Crutcher and Control Risks, in its report in June, had absolved the management of any wrongdoing, and Infosys made public its excerpts. Murthy had demanded that Infosys make the entire report public.

The board on Tuesday said publishing additional details would affect Infosys's ability to conduct future probes, besides confidentiality of whistleblowers in any future investigation.

"I stand by every question on poor governance raised in my speech to Infosys investors dated August 29, 2017. The fact remains that none of these questions has been answered by the Infosys board with the transparency it deserves," Murthy said in a statement, adding he was "disappointed".

"The core question still is how and why the Infosys board approved an unusual and unprecedented severance payment agreement of 1,000 per cent (of the standard Infosys employment contracts) to the former CFO, and why the board did not disclose this information proactively and much earlier," wrote Murthy in his statement on Tuesday. "Sadly, it appears we will no longer know the truth."

As reported earlier, Murthy may pursue his questions on "poor governance" at the company and take up the issue with Nilekani, sources close to Murthy said. (Read more here)

"I spoke to Murthy, he has gone abroad yesterday. He said he will come back and talk to Nandan. He said he is not going to keep quiet," said an ex-Infosys official, who is on the same page with Murthy on the issues raised by him.

First Published: Thu, October 26 2017. 11:33 IST