'Unending' restructuring at Infosys raises concerns

Is boss Narayana Murthy confused about how to resurrect his company, ask experts

What started off as a foolproof plan to bring Infosys back on track and arrest the declining revenue growth, now appears to have turned out to be a long-drawn exercise, leading to loss of patience among employees, experts and observers.

“It makes us feel that Narayana Murthy himself is not sure of how to go about it,” Aviral Gupta, founder and investment strategist, Mynte Advisors, told Business Standard.

“This is not the NRN (N R Narayana Murthy) of the past. What we are seeing is rather a confused leader struggling to revive his baby. This, definitely will, in the near future, reflect upon the client base of Infosys, as it being in a business where intellectual capital is involved the stability of execution team is of prime concern to the client.”

Another senior analyst, who did not wish to be named, said, “I am tired of commenting about their restructuring. To me, it looks like a never-ending process.”

Within a fortnight of the surprise exit of V Balakrishnan, board member and Head of India business unit, Infosys BPO and Finacle, who was also touted as one of the frontrunners for the post of chief executive officer (CEO), Infosys on Friday said it had created new posts of presidents. It elevated B G Srinivas and U B Pravin Rao to the posts. The company also detailed how it has realigned portfolios under the two.

While these posts are new for Infosys, its close competitor Wipro had successfully managed the company with five presidents reporting to its executive chairman Azim Premji till January 2011. After that, the company decided to have a dual CEO model and elevated Girish Paranjpe and Suresh Vaswani for those posts.

Infosys has additionally decided to scrap the executive council just months after undertaking the largest ever expansion of top decision making body.

Even as the moves are likely to lift some of the uncertainty surrounding the company's CEO succession planning, observers express disappointment over the “unending” and “long-drawn” restructuring, which, to some, is “a reflection of indecisiveness” of the company’s leadership.

"Murthy was out of touch with the day-to-day functioning of the company, which is bound to happen since he was away for long. So when you come back into the system, you require time to settle down,” said B S Murthy, founder CEO of LeadershipCapital, an executive search firm.

Since the return of Murthy as the executive chairman in June last year, Infosys appears to have experimented with every trick in the book. In August 2013, the Bangalore-based company decided it would bring its focus back on the traditionally-profitable IT business.

Following this, the company started to become more centralised, limiting the sphere of decision making by senior executives. Infosys also attempted cost rationalisation and reduction of senior hands onsite.

Amid these changes, Infosys has seen over eight major exits since August last year, including that of Ashok Vemuri, head of Americas and manufacturing and engineering services who left the company to join competitor iGate as the CEO.

“All these very clearly show that the rot has spread very deeply within the organisation and NRN has really got a tough task ahead to regain confidence in investor and client community," added Gupta of Mynte Advisors.