Hunt for new CEO: Infy sets the ball rolling

Next chief will be the first non-founding one since the IT company's inception 30 years ago

Infosys, India’s second-largest information technology services company, has set the ball rolling to find a new chief executive officer (CEO), with incumbent S D Shibulal announcing he will retire ahead of his superannuation in March 2015.

“Shibulal has expressed his desire to retire as CEO and MD (managing director) of the company and as member of the board of directors, either on the date of the last board meeting before his superannuation — January 9, 2015 — or when his successor is ready to assume office, whichever is earlier,” Infosys said in a release.

Infosys said its nominations panel would evaluate internal and external candidates for the job, with the help of corporate executive evaluation specialist Development Dimensions International (DDI) and multinational executive search firm Egon Zehnder. K V Kamath, lead independent director, is chairman of the nomination panel, while Kiran Mazumdar-Shaw and R Seshasayee are two other members.

While there has been speculation on Shibulal’s succession for several months, Friday’s announcement has led to the names of several successors doing the rounds. Despite Infosys saying it will also consider external candidates, most experts believe the company would promote one of the two presidents it had appointed in January this year to the CEO’s post.

“For heading a company such as Infosys, a deep understanding of the ethos and culture is essential. Therefore, I don’t think an external candidate would be able to justify the job. And, when we look at internal candidates, there are only two names that come to mind — those of B G Srinivas and U B Pravin Rao. The company has portrayed them as its leaders,” said a Mumbai-based analyst, on condition of anonymity.

Srinivas is board member, head of Europe operations and global head of the financial services and insurance unit. He was also made head of Infosys Lodestone. Pravin Rao is senior vice-president at the company and global head of the retail, consumer packaged goods, logistics and life sciences segments. He is also director of Infosys Leadership Institute.

“Between BG and UB, it is anybody’s guess who will make the cut. I feel it will be BG, because of his demeanour, conduct and performance. However, UB has emerged as a dark horse at Infosys. So, we cannot rule him out completely,” the analyst  added.

In January, Infosys had appointed Srinivas and Rao as presidents and divided most of its businesses between the two, almost equally. Currently, the two report to the CEO. A few days after the appointment of the two presidents, Executive Chairman N R Narayana Murthy had said the company’s new structure would help ensure a smooth succession after Shibulal’s retirement.

“A group of senior people went into deep deliberations to arrive at the two-presidents structure...It also helps the nominations committee to create an internal platform of a candidate that could be looked at to decide on the next CEO…All of us would like one of these two people (B G Srinivas and U B Pravin Rao) to become the next leader, after Shibulal. But that’s for the nominations committee to decide,” Murthy had said.

At least five experts contacted by this paper said they were confident one of the two presidents would become the next CEO; four of them favoured Srinivas for the top job.

Srinivas has been counted as a front runner for the CEO’s post for years. Until nine months ago, Infosys had three front runners for the post —Ashok Vemuri, V Balakrishnan and Srinivas. Since then, Vemuri and Balakrishnan have quit the company.

 “Infosys is going through a struggle because of low business...But how long can they keep doing that? Therefore, it is important for the company to bring in an external candidate who can strengthen their sales functions and ensure new business comes its way,” said Kris Lakshmikanth, CEO and managing director of city-based human resources company HeadHunters India.

“However, knowing Infosys’s culture, the company is unlikely to bring in an outsider for the CEO’s post.”

Also, if an external candidate does come, he will need to be a very large entity because with Murthy at the helm of affairs, it will be hard for him to ensure he isn’t overshadowed.”