Infy reboots with non-founder CEO

The excitement in the conference room of Infosys' Bangalore headquarters was palpable when the company on Thursday ended a speculation of months by announcing Vishal Sikka, former executive board member at software maker SAP, was going to be the next chief executive officer & managing director. U B Pravin Rao, the company's president at present, was named the next chief operating officer.

Business Standard had reported on May 6 Sikka was among frontrunners for the CEO's post at India's second-largest information technology service firm. Sikka, who has also been inducted to the Infosys board, will assume the new roles from August 1, a day after incumbent S D Shibulal steps down.

The appointment is significant for the company in more ways than one. He will take over at a time when the Bangalore-based company will be completely run by professional managers and all its co-founders will have given up their executive roles.

An excited N R Narayana Murthy, co-founder and executive chairman, on Thursday announced that Sikka was going to be the new chief financial officer & managing director of the company. He soon corrected himself and said in a lighter vein that he got to know Sikka in Hindi meant a coin. So, "Vishal Sikka means lots of money, big money. This is what we need for Infosys... the man who represents big money and a great intellectual competency is coming to us."

To facilitate a smooth transition, Murthy and S Gopalakrishnan, another co-founder, have decided to voluntarily step down from their respective roles as executive chairman and executive vice-chairman from June 14. However, both will continue in non-executive roles till October 10 to facilitate a smooth handover of responsibilities. After that, Murthy will assume the role of chairman emeritus, a role he has termed "just a recognition", clearly signalling he will have no managerial responsibilities to play within the company. Murthy said he now wanted to spend time with his grandchildren and his family.

K V Kamath, the lead independent director, has been designated as the next non-executive chairman, a role he will play for a second time at the company.

The firm also announced it would dissolve the executive chairman's office, widely perceived as the power centre. Rohan Murty, executive assistant to the chairman, whose role was coterminous with Murthy's, will also leave the company the same day.

Rao, the next COO, is an old-timer who has spent almost 28 years at Infosys and whom lead independent director aptly calls the 'nuts-and-bolts man'. Rao will assist Sikka in day-to-day operations.

Along with Rao, the company also announced the elevation of 12 senior leaders to the position of executive vice-presidents with additional responsibilities.

The move is seen as a bold decision by the company as Sikka, given his information technology product background, was not perceived by many as ideal for the services business, where business comes from billing the clients on the basis of the number of hours spent by the associates. The company has, however, reposed strong faith in Sikka's abilities, his technological acumen and thought leadership.

"At this point, what is happening around the world is transformation. So, we basically had a bias for a transformational leader. Vishal Sikka is several personalities rolled in one - he is a strong thinker, he is a strong CTO (Sikka was chief technology officer at SAP) and he is a strong developer of products and software. And, he has executed on this," said Kamath, also the chairman of the nomination committee.

Sikka himself believes the boundary line between software products and services is getting blurred with the transformation that is happening in the global market. "What we are seeing around us is a great services transformation. Companies are moving towards delivering things with a services mindset, a client mindset; with a long-lived, multi-generation, deeply-helped relationship that lasts across generations of technology."

Thursday's developments are expected to put to rest the uncertainties around the company's CEO selection - an issue that has in recent past triggered a slew of exits, including those of many senior leaders like B G Srinivas and Ashok Vemuri.

"The news of Sikka's appointment is extremely important for Infosys. It ends the uncertainty, which was the main enemy of the company. The new CEO will have to move very quickly to first calm the three key stakeholders - employees, customers and the investors - in that order," said Partha Iyengar, country manager (research), Gartner India.

The market, which had been eagerly awaiting the conclusion of the CEO search, initially cheered the announcement. The company's shares rose nearly four per cent in intra-day trading on BSE. However, the stock settled down 0.4 per cent from its previous close on profit booking.

According to T K Kurien, CEO of Wipro, another Bangalore-based IT services company, Sikka's entry into the Indian software industry will boost the profile of the industry in the global arena. "We have known Sikka as one of the foremost minds in the technology landscape. We see his entry into the Indian software industry boosting its profile globally."

In April, Infosys had announced the start of its new CEO-selection process, with incumbent Shibulal deciding to retire from the company ahead of his scheduled superannuation. The company has engaged two external search agencies - Development Dimensions International (DDI) and Egon Zehnder - to facilitate the selection process.

Kamath said the company shortlisted four candidates from a list of various internal and external ones; among them, Sikka was found to be the most suitable for the post.