Infosys Ltd’s new chairman said his priorities were to find a CEO, reconstitute the board and shape future strategy, as he sought to calm investors frazzled by the recent shock exit of the firm’s chief over a prolonged row with its founders. Nandan Nilekani, one of Infosys’ seven founders and a former CEO, was named chairman late Thursday in a victory for the founders, who led by Narayana Murthy have waged an increasingly acrimonious battle with the board for months over alleged corporate governance lapses.
Vishal Sikka, the first non-founder CEO of Infosys, resigned last week blaming Murthy for creating an “untenable atmosphere”, sparking a sell-off in Infosys shares and wiping billions of dollars off the company’s market value. “I have come in to focus on the future of the company, I have come in to take the company forward and deal with its challenges,” Nilekani told investors on a call on Friday, adding he would stay with the IT firm for as long as needed. Earlier in the day, he tweeted: “Joined @Infosys at 26, re-joined it at 62. Life does turn full circle!”
Credited for increasing Infosys’ revenue to $2 billion from $500 million during his 2002-2007 stint as it chief, Nilekani said his key task would be to assist in the search for a new leader from within the company or outside, adding that Infosys alumni would also be considered for the role. India’s No. 2 software services exporter is looking for a CEO who will be able to manage a large global firm, accelerate strategy execution and oversee its transformation, he said.
Chief Operating Officer Pravin Rao has been named interim CEO and will remain in the post until a replacement is found. The management reboot comes at a time when the firm, like the rest of India’s over $150 billion IT sector, is bracing for a potential change in U.S. work visa rules that could restrict the movement of engineers and developers to its biggest market.
“Any incremental news of stability is good, especially the fact that someone like a Nandan, who’s one of the most successful CEOs in Indian corporate history, is back,” said Vaibhav Dhasmana, IT analyst at Jefferies.
Nilekani, however, refrained from commenting on Infosys’ future strategy, apart from saying it would be aligned with global developments and that he saw tremendous opportunity in software, data and machine learning. More businesses are trying to adopt automation and services such as big data, cloud and analytics to become agile and prevent being disrupted by nimbler startups.
“I have a very open mind. I will request our strategy team to take a complete inventory of all things that are going on,” Nilekani said, adding the current strategy would be reviewed on the basis of market size, growth and other factors.
There will be no changes in the capital allocation policy and a $2 billion share buyback will also proceed as planned, Nilekani said.
Nilekani, who along with his family owns about 2.3 percent of Infosys and, according to Forbes, is worth $1.72 billion, would also need to tackle retention of senior level executives critical to rolling out strategy.
The architect of India’s ambitious biometric identity programme, Nilekani said he would engage with shareholders and customers, and resolve differences over corporate governance. Disagreements between founders and the board centred around a rise in Sikka’s pay, the acquisition of automation firm Panaya for $200 million and a severance package offered to a former finance chief.
Infosys shares plumbed a more than three-year low on Monday but they have risen since on expectations of Nilekani’s return. Indian markets were closed for a public holiday on Friday.