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Narayana Murthy comes out of retirement to head Infosys Ltd again

Narayana Murthy had given up all executive functions at Infosys in 2006.

Infosys has brought its iconic founder N R Narayana Murthy out of retirement to strengthen the company that has slipped to number three in the Indian IT league since he left in August 2011.

The $ 7.3 billion-revenue firm which has been almost synonymous with India’s reforms story has also brought in Narayana Murthy’s son Rohan Murty,29,a Harvard doctorate in computer science,as executive assistant to his father for the duration of his five-year tenure.

While both the father and son will only take a token salary of Re 1 per year,for a company that had consciously eschewed the family-run model of business in India,drafting Rohan marks a major change of leadership practice.

The company’s board of directors took the unusual decision to recall Narayana Murthy after a disappointing year which saw its share price fall by over 12 per cent in one day. The scale of the drop pushed the board led by K V Kamath,the non-executive chairman,to make the call to Murthy on May 4.

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Informed sources said hedge funds invested in the company had put some hard questions to the board,including on its reluctance to deploy its cash reserves of over $ 4 billion to make acquisitions and more aggressive overseas investments.

But at Saturday’s press conference at the company headquarters,both Murthy and Kamath were at pains to deny assertions that the changes were demanded by internal and external challenges faced by Infosys.

“This calling was sudden,unexpected,and most unusual. But then,Infosys is my middle child. Therefore,I have put aside my plans-in-progress and accepted this responsibility,” Murthy said.

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Narayana Murthy had given up all executive functions at Infosys in 2006 when he turned 60 and stepped down as executive chairman of the board after serving as the founding CEO from 1981 to 2002. From 2006 to August 20,2011,he served as non-executive chairman and chief mentor.

Following his retirement at age 65 in 2011,the company gave him the special status of chairman emeritus with a final retirement age of 70.

Murthy’s fresh tenure will be subject to approval by shareholders. Infosys has projected a low growth rate of 6-10 per cent for this year,well below industry body Nasscom’s projection of over 12 per cent growth for the sector. As per Gartner data,Infosys now ranks behind Cognizant Technologies among Indian IT firms. In the global league,it is at the 26th position,while industry leader TCS is at 16th,and closing in on the top 10.

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With Murthy’s return to the helm of affairs,Kris Gopalakrishnan,executive co-chairman of the board and a former CEO and co-founder,has been re-designated as vice-chairman of the board. K V Kamath has become the lead independent director. Murthy will now join CEO and managing director S B Shibulal,also a founding employee,in running the company.

Murthy was careful to praise the role of Shibulal on Saturday. “When Kamath invited me on May 4 to add value to the company,to add value to Shibulal,I was in a dilemma. Then I realized that I was fortunate to add value to previous Infosys CEOs as well,so I saw this as an opportunity to add value to the mission of Shibulal,” he said.

The move to bring in Rohan Murty as executive assistant to Narayana Murthy is being seen as possibly putting in place a long term succession plan for the company as its founding CEOs exit in 2015. But Murthy denied this.

He said he looked at his return as a “second innings”,and that he had decided to bring Rohan along as executive assistant because he had decided in 2011 to do things in the company of his loved ones. He also said he needed his son’s guidance to communicate with the youth at Infosys.

Narayana Murthy declined to specify the trigger for his return. But he said he hoped to focus on large application development,maintenance and business process management.

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Murthy began Infosys in 1981 with a paltry borrowing of $ 250 from his wife. By the time he moved on Infosys had become a $ 6 billion-revenue company with a market capitalization of $ 36 billion.

Three co-founders — Nandan Nilekani,who was succeeded by Gopalakrishnan and now Shibulal — have run Infy since 2002 when Murthy stepped down as CEO.

First published on: 02-06-2013 at 02:05:25 am
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