Vishal Sikka quits as Infosys CEO, citing distractions and personal attacks

Sikka would hold office until the new permanent CEO and MD takes charge till March 31, 2018.

Infosys’ first non-founder chief executive Vishal Sikka has resigned from his role as managing director and CEO. U B Pravin Rao has been appointed as the interim MD & CEO of India’s second largest IT services firm. 

The former SAP board member has just completed three years as the chief executive of Infosys and he has been severely criticized by founders and shareholders over corporate governance over the last couple of months.

In his notice of resignation to the company’s Board, Sikka reiterated his belief in the great potential of Infosys, but cited among his reasons for leaving a continuous stream of distractions and disruptions over the recent months and quarters, increasingly personal and negative as of late, as preventing management's ability to accelerate the company's transformation. 

Sikka has been appointed Executive Vice Chairman effective today and would hold office until the new permanent CEO and MD takes charge till March 31, 2018.

The Board has acknowledged Sikka’s reasons for resignation and said it regrets his decision. 

“In particular, the Board is profoundly distressed by the unfounded personal attacks on the members of our management team that were made in the anonymous letters and have surfaced in recent months. As the Board has previously stated, a series of careful investigations found no merit to the unsubstantiated and anonymous allegations that had been asserted. The Board denounces the critics who have amplified and sought to further promote demonstrably false allegations which have harmed employee morale and contributed to the loss of the Company’s valued CEO. The Board thanks Dr. Sikka for his outstanding leadership of the Company, and for his extraordinary contributions during a period of rapid evolution in this industry,” said the company in a note. 

Analysts said when he became the first non-founder chief executive of Infosys in August 2014, he had multiple challenges both on  the business and cultural front given the changing focus of global clients towards digital technology and his transformation goals was as big as the ones of IBM. 

Notwithstanding significant improvement on digital transformation fronts, under Sikka’s leadership, however, changes have not resulted in better returns for its shareholders and the market capital has only eroded. Muted return, some analysts pointed out, has been a trend for almost all the Indian and some global IT services stocks given the economic slowdown in key markets in the US and Europe. 

“Sikka is from a different league. Without him as CEO, it kind of goes back to the old format of Infosys. Reported talks of one of the founders coming back to the board may have created a sense of lack of freedom for Sikka,” said Rajesh Gupta, India Partner, IT research firm ISG.