Narayana Murthy pledges turnaround within three years

By Harichandan Arakali

BANGALORE (Reuters) - Infosys , India's second-largest software services provider, will take the tough, painful decisions needed to return the company to a "desirable" state in 36 months, founder N.R. Narayana Murthy said on Saturday.

The company will "re-focus on building a more predictable earnings model," Murthy said at the company's annual meeting, after shareholders accepted a proposal by the board to bring him back as executive chairman.

Earnings' predictability had made Bangalore-based Infosys an investor darling and the $108-billion Indian IT industry's bellwether.

Over the last two years, however, the company has turned in a string of disappointing results as it struggled with a strategy to shift to higher value-added services by offering consultancy and software products and solutions.

Murthy committed to spending more on the company's staff of more than 150,000, revitalising his salesforce with incentives, and in a rare public gesture, offered flexibility on pricing to win large contracts.

The 66-year old founder, who returned on June 1, had stepped down as CEO 11 years ago. He is the company's second-largest shareholder.

(Reporting By Harichandan Arakali)