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Is it time for Murthy to hire a CEO from outside Infosys?

With Vemuri out of race to be CEO, there are only 2 people left within Infosys who qualify for the role

Shivani Shinde Nadhe  |  Pune 

With the exit of Ashok Vemuri from Infosys many are asking if the company's leadership planning has lost its purpose and whether N R N Murthy, Chairman Infosys, should look at hiring a CEO from outside.

"He does feel that the idea of giving each and every founder member a shot at the CEO post afterall was not a great idea. Somewhere he does acknowledge it. But its too late now," said a source aware of the restructuring happening at Infosys.

Vemuri, head Americas and global head of manufacturing, was touted as the CEO in waiting after the current CEO and one of the founders S D Shibulal's tenure comes to an end in 2015. A year back when the company had shuffled the role of Vemuri and Srinivas, the market was buzzing with that Vemuri may step down.

ALSO READ: Vemuri didn't consult me before quitting: Murthy

"Murthy’s return as executive chairman suggested that Infosys’ leadership planning clearly didn’t work out as expected. Ashok’s exit has only exacerbated that issue. We believe Infosys needs to show greater openness to external candidates for senior roles, something which it has been highly resistant to," said Nimish Joshi and Rohit Kadam of CLSA in their report.

Analyst also add that with Vemuri out of the race for the CEO role, there are only two people left within the company who can qualify for the role-- B G Srinivas and V Balakrishnan. Both old hands at Infosys, Srinivas (also called as BG) is member of the board, head of Europe and global head of BFSI and Balakrishnan, who earlier headed the role of CFO now Heads – Infosys BPO, Finacle, and India Business Unit and is Chairman, Infosys Lodestone.

"From what we are hearing Bala is clearly been given a bigger role. Since his mandate to head the India business, he also heads the BPO unit (which is doing very well), Finacle and also Lodestone," said a source on condition of anonymity.

Infosys rarely has an executive that has been hired externally, all the senior executives have been groomed iternally. "An argument for considering external candidates for leadership positions at Infosys is that change could be more important than continuity especially as things have not been going that well. While outsiders would have some clear disadvantages: not knowing the company culture, need to spend time building trust among others, Murthy’s presence can help paper over that. In our view, this could also keep the existing leadership team on its toes," said the CLSA report.

Industry expert also point out that in a bid to bring back the company to a fast growth pace, Murthy is decentralising decision making. While this may be good till he is around, but yet again creates vacumm when Murthy will finally relinquish his post. Rather Murthy by hiring appointing people to his office is clashing with the Executive Council.

"How does the Executive council (the highest-ranked executive body at Infosys) co-exist without conflict with the newly created Chairman’s office? Does the latter interfere with the former in any way? Are the powers, duties and responsibilities well demarcated between the two bodies or is there a risk of the existence of a parallel powerful body through the Chairman’s office? Will the Chairman’s office act for the Executive Council in some matters and/or overrule it?," said Viju George of J P Morgan in his note.

ALSO READ: Analysts raise governance issue on Rohan Murty's role

Murthy has created a Chairman’s office of which his son (Rohan Murthy) is the first member, who was appointed as his executive assistant or EA (announced at the time of Murthy’s becoming the executive chairman). Now, two of the three new executive council members are also additions to the Chairman’s office (namely, Mavinakere, the CRO, and Binod HR). There is also a fourth member Deepak Padki (head – M&A) appointed to the Chairman’s office. With these appointments, the Chairman’s office now has five members including Murthy himself.

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First Published: Thu, August 29 2013. 15:51 IST