Nandan Nilekani, non-executive chairman of Infosys, has promised to bring stability back to India’s second-largest software exporter in spite of a “complex environment”. He, however, has a bigger task at hand — building a strong and independent board.
The abrupt restructuring of directors and the board’s U-turn from accusing N R Narayana Murthy to almost apologising to the Infosys co-founder immediately after Nilekani’s return, have left observers concerned.
Analysts say it is unclear whether Infosys would make the Panaya acquisition investigation report public, one of the key demands of Murthy. This is despite Nilekani having made it clear that he would take a call after evaluating the reports.
"It needs to be examined as to who was actually in control of the company, the board structure has changed and many directors have resigned. The CEO has also changed. The larger question of "change of control" means an ability to appoint directors, change the CEO," says Shriram Subramanian, founder and managing director of InGovern Research Services, a proxy advisory firm. "From an Institutional Investors' perspective they would be keen to know who was in control that orchestrated the changes of last week."
Nilekani has said that the firm would adhere to the highest standards of corporate governance that Murthy — whom he calls the father of corporate governance — had set. “I think there is a massive amount of digital disruption happening today at a very accelerated pace, and, obviously, there are people who understand that that would be helpful,” Nilekani told analysts on Friday.
“But at the same time, governance is not just about technology, it’s about balance, it’s about judgement, it’s about corporate governance, it’s about ethics, it’s about selecting the right people. So, these are all discussions and judgements of human beings.”
Nilekani says he would look at expanding the board and that it would consist of people with the right calibre and expertise to run a complex organisation. At the same time, he is vehement that despite his return, Infosys would be a board-managed company.
“With Nandan coming, we expect some changes on the board that are more aligned with the co-founders. If you see the time of Nandan at Infosys (2002-2007), he was known for his biggest strength — client relationship. The changing demands of clients will be a test for Nandan,” said Pareekh Jain, analyst at HfS Research India.
Infosys future on Sikka’s legacy
Nilekani quit Infosys in 2009 to head the Unique Identification Authority of India, which built the world’s largest citizen biometric database.
Since then, he has used Aadhaar as a base to envision India Stack, a set of APIs that provides the underlying architecture to build a digital ecosystem for the country. It includes building a system to make financial transactions of low-value effectively between two individuals or with a third-party on a smartphone, an electronic repository of documents and the architecture, designed to empower an individual to allow access of data. At the same time, it creates business opportunities for start-ups that harness the data to provide services.
“If you know, the Aadhaar project was conceived by one government and was taken forward strongly by another government. This shows the consensus building I have done. I will bring the same consensus building skills here,” Nilekani said.
Nilekani says he is aware of the technology shifts, the emergence of artificial intelligence (AI), machine learning and the data-driven future that the world is heading towards. This also means that Nilekani could retain some of the initiatives on AI and digital that Sikka had conceived, but with a more data-driven approach. He is likely to continue Sikka's strategy in line with similar things being done by both Indian and global competitors.
“Changing demand of clients will be the test for Nandan,” said Jain of HfS research. “But some of the efforts such as zero distance, Design Thinking may not get the same priority by the new CEO and board headed by Nilekani.”
Bala wants Nilekani to stay for 2-3 years
Former chief financial officer of Infosys V Balakrishnan has said Nilekani should continue his stint for two-three years. Balakrishnan, who has been one of the most vocal critics flagging alleged erosion in corporate governance standards at Infosys, also stuck to his demand that co-chair-turned-independent director Ravi Venkatesan step down from the board.
Balakrishnan said Nilekani should focus on getting a good chairman “whenever he leaves in the future” to ensure that the “board is in safe hands”.
(With inputs from PTI)