Murthy says Infosys likely to appoint CEO from within

Cowen and Company says Murthy might be executive chairman for three years, not five

Amid speculation Infosys may hire an outsider as chief executive officer (CEO) after incumbent S D Shibulal retires in 2015, Executive Chairman N R Narayana Murthy has said the next chief executive (CEO) might be from within the company.

“The company believes it will be able to select its future CEO from a large pool of available senior managers,” Moshe Katri of American broking house Cowen & Company said in a note published after a meeting with Murthy.

Shibulal is the last of the company’s co-founders holding the post of CEO. Many observers and experts believe after his retirement, India’s second-largest information technology (IT) services company should explore appointing an outsider as CEO.

Recent exits
The recent exit of Ashok Vemuri, widely touted as one of the contenders for the CEO’s post, had added fuel to the speculation. Before Vemuri quit to join iGate as CEO, he was a board member, heading the Americas and global manufacturing verticals at Infosys.

Now,  V Balakrishnan and B G Srinivas are the two contenders for the top post. Balakrishnan, earlier chief financial officer, is currently head of Infosys BPO, Finacle and the India business unit and the chairman of Infosys Lodestone. Srinivas is head of Europen operations and global head of the financial services and insurance units.

Experts disagree
Many observers, however, feel the two may not be suited for the CEO’s post. “I think the company is going to broaden the process of the CEO search by looking at executives a level below Balakrishnan and Srinivas,” an analyst with a domestic brokerage said, on condition of anonymity.

“Infosys is a company that requires a leader from within because their culture is very unique and an outsider may not be able to do justice to the CEO’s post.”

According to the Cowen and Company note, Murthy said the management had successfully retained “promising senior talent” that was about to leave, but “voluntarily decided to let less promising talent depart”.

Investors concerned
The recent slew of exits from Infosys has led to concern among some investors. Since Murthy returned to the company in June 2013, Infosys has seen several senior-level exits. The company saw the exits of head of global sales and marketing Basab Pradhan, vice-president and head (financial services) in Americas Sudhir Chaturvedi, and head of utilities and resources (North America) Stephen Pratt.

The Cowen and Company note also said it appeared Murthy might hold the post of executive chairman only for three years, instead of the five-year tenure he was initially brought in for.

“The initial thought is Murthy will maintain his current role only in three of the five years designated by the board. However, in case the new CEO (expected to be nominated in 2014) needs help in a transition period, Murthy will maintain his role in years four and five,” it said.