'Cultural issues' behind Vishal Sikka's exit as Infosys CEO

As the first non-founder chief executive, Vishal Sikka “gives in” to the board and co-founders' feud and steps down. And, Infosys seems to have again proved its apathy towards a cultural shift of the type information technology (IT) companies need. 

When Sikka, a Stanford University alumnus and former SAP board member, took charge at the founder-led Indian IT services major, he had a crucial responsibility apart from business — changing the culture at Infosys. 

The company once saw co-founder Narayana Murthy "taking a decision on which carpet to choose for one of the floors at the Infosys campus in Bengaluru”, said a former employee. It began to see changes in areas from operations to technology under Sikka. However, after a series of “distractions” over claims of governance lapses under his regime, he blamed the the co-founders for passing on allegations as the primary reason for resignation. 

Though Murthy has not pointed fingers at Sikka’s strategies, he continuously raised concern over the current management and board’s ability to ensure corporate governance over more than one issue. 

“What may have gone wrong is Sikka’s efforts to change the company culturally. Infosys has been a very profit and numbers-oriented company and Sikka a pure technocrat. He wanted  to bring in technology shifts towards digital, often compromising on small operational cultures, such as shifting the office to the US or overlooking small expenses for a bigger transformation,” a former employee said, requesting anonymity. 

Sikka was a “supremely confident CEO” and “had his way of working”. This “potentially set off a cultural clash”, the employee added. 

Global analysts said both co-founders' criticism and “lack of confidence” among at least a few board members added to Sikka’s concerns.     “It appears that he has lost the confidence of a significant part of the board. When this is coupled with the ongoing criticism and undermining from Narayana, it appears he has decided to move on. The founders may take some pleasure in his resignation; however, Infosys faces a difficult task in replacing him and the abrupt departure puts it into a difficult situation. Few strong or promising executives will want to take on the troubles that Sikka had with a divided board and it remains to be seen if the board will promote from within,” said Peter Bendor-Samuel, chief executive officer, Everest Group, global researcher. 

Sikka said it was difficult to deal with the distractions. 

“When I started, the industry and Infosys both were in quite a challenging situation. I am really proud of the results we have achieved. What I found difficult to deal with was the continuous allegations and continuous noise around the same thing -- the Rajiv Bansal separation, the Panaya deal and the David Kennedy resignation, over and over again. At some point, you realise this is taking a heavy toll on the organisation, this is taking a heavy toll personally. I have felt that this is an untenable situation and I do not want to do this any more,” Sikka told journalists over a video conference. 

The conflict started early last year, over a hefty severance package to former chief financial officer Rajiv Bansal and Murthy raised concerns over governance. The board and management made many direct and indirect efforts to convince Murthy.  

What came as “another disturbing” element for him were repeated questions over his hefty salary. “His salary and setting up a front office was against the culture of the founder-led Infosys.”  

At least two former Infocions and one industry analyst say Sikka always focused on a “bigger picture”, unlike Infosys’ “extremely profit-centred” approach at a time when the IT services industry is being disrupted. “He is looked upon as technical person or transformation centric than a profit centric leader by many,” said a second former employee. 

“The biggest issue was that he was not able to win over the founders and the key Infosys leadership. May of his programmes worked and the direction he set is the right one. However, if you don’t have the employees' backing. you cannot execute well. This was made much more difficult as he had a highly respected founder running a campaign to get him out,” added Bendor-Samuel. 

The bigger task before the Indian IT major is finding an alternative. “Vishal's departure is a loss for both infosys and the market.  There is massive change required to succeed in the next disruption and every IT services vendor will have to make the hard choices.  The next CEO must have the backing of the full board to get there,” said Ray Wang, principal research analyst at Silicon Valley-based Constellation Research.