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Infy shift sparks succession buzz

Source : BUSINESS_STANDARD
Last Updated: Fri, Oct 12, 2012 19:00 hrs
Employees of Indian software company Infosys walk past Infosys logos at their campus in the Electronic City area in Bangalore

V Balakrishnan ('Bala') has moved on from the role of Infosys CFO but has got backing from N R Narayana Murthy, chairman emeritus, as the next potential chief executive for the company.

Describing Balakrishnan as an 'extraordinary individual', Murthy said: "I have no doubt at all that the nominations committee will look at him at the time when they have to choose the next CEO."

Murthy's comment comes amidst concerns raised by analysts on the timing of Bala's resignation. Bala will continue to be on the board and be responsible for three business unit - business process outsourcing, Finacle and India.

On Balakrishnan's stepping down as chief financial officer, Murthy said he represented the best traditions of Infosys. "In keeping with that tradition, he has decided to voluntarily give up the CFO position in favor of a younger candidate – Rajiv Bansal – like Mohan (T V Mohandas Pai) did in 2006," he added.

Bala has been in the Infosys finance team for 20 years and CFO for six years. S Gopalakrishnan, executive co-chairman, said: "Bala is one of the finest CFOs in the country. He has led his team in setting new standards in financial reporting, corporate governance and compliance. A top performer, he has successfully managed a high quality financial model, which has withstood the pressure of the current economic downturn."

Murthy's backing will be crucial for Bala, as this puts to rest the uncertainty surrounding this resignation. "Infosys has had so many moving pieces in the recent past. Everyone was starting to get a feel that things are settling down. But now we suddenly have this issue coming up. It does not send the right signals to the market or to clients," said Sudin Apte, chief executive at outsourcing advisory Offshore Insights.

Self & others
Ask the man himself about his resignation and he gets philosophical. "I had once met Adam Gilchrist (the noted Aussie cricketer) and asked him when he decided he'd retire. He said the moment he dropped a catch, he had decided he will retire. You have a lot of things on your mind, sometimes the decision point comes, and you know it. There was no trigger in my case. The board has been discussing about the succession plan and I thought it's the right thing to do," he said.

Gopalakrishnan has in the past said the company has two to three contenders within for the role of CEO. Bala will now join Ashok Vemuri, who heads North America and manufacturing, and B G Srinivas, Infosys' head for Europe and BFSI (banking, financial services and insurance), as the top contenders for the top job.

Those betting on Bala as a strong contender for the CEO's post, though, are still disappointed on his stepping down from the CFO's role. "If one of the contenders for the role, why would you want to step down from the CFO's role? It is, rather, the best position to be in such situations," said a senior analyst of a brokerage house.

"V Balakrishnan has decided to resign from his position, but he will remain on the board of Infosys and will be responsible for Infosys' banking product, BPO and India business unit. Heading these businesses constitutes running and managing a profit & loss, perhaps (Infosys is) positioning him as a possible contender for the CEO role, post Shibulal," said Viju K George, analyst, JP Morgan.

S D Shibulal, the present CEO and managing director, said: "Every person in the company is being groomed for a higher role. Bala has been handling a growing and strategic business for the company. And, it is a growing responsibility as well."

Ahead
No doubt, BPO has been performing better for Infosys than the overall company. The company sees this business growing by 18 per cent, compared to the five per cent for the overall company. Finacle is core to the Infosys' 3.0 strategy as it comes under the product and platforms segment. Within product Finacle is one of the largest units at present. As for India bsuiness, while it has been pretty small, the company has been winning large government deals such as India Post, MCA and others.

Mohandas Pai, ex-CFO and HR head, feels Bala has been at the helm of finance for long and perhaps the change will be good. When asked if this resignation meant Bala was in the running for the top job, Pai said: "Ashok (Vemuri), BG (Srinivas) and Bala are the three contenders for the top job at Infosys. I see the role of Shibu as transitionry; the next CEO will redefine the company for years to come. I would have liked it if they would have given a global portfolio to him as well," he told Business Standard.

Shibulal's tenure as CEO will come to an end in 2016. Before that, in the next 12 months, the company will have to decide on the chief operations officer.

In sum, the next 12 months will be crucial for the company and for the three that many see as the top contenders for the top job -- Ashok Vemuri, B G Srinivas and Balakrishnan.




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