Murthy tightens grip over Infosys

Last Updated: Mon, Jul 15, 2013 04:25 hrs

N R Narayana Murthy, who returned to Infosys last month, has now taken over the driver's seat at the Bangalore-based company. After assuming charge as the executive chairman, Murthy has returned to the same office, in the company's corporate headquarters in building number one, from where he unassumingly controlled its direction for many years.

Soon after his retirement from all executive roles in August 2006, Murthy, the co-founder of Infosys, had withdrawn himself to building number 10, known as the heritage building and which used to be the corporate headquarters of company during its infancy.

To accommodate him in the corporate block, Chief Executive Officer and Managing Director S D Shibulal, who was co-sharing the corner office with vice-chairman (earlier co-chairman) S Gopalakrishnan, has now shifted to a place on the second floor of the building that used to be his office when he was heading the operations as the chief operating officer. According to employees, ever since Murthy assumed the new role, he has confined himself to the crux of the company affairs and is busy formulating action plans to be rolled out in phases, without creating much flutter. This is expected to result in some changes in management, especially at the mid-level.

In an interview with Business Standard after taking over as executive chairman last month, Murthy had said he would soon identify areas where the company had not done well. "After studying the situation and after collecting data, certainly I would participate in discussions on what has worked and what has not worked, and what needs to be changed," Murthy had said.

Earlier this week, Basab Pradhan, a company veteran heading the global sales and marketing, quit. Sources said Pradhan's exit could have been because of the course correction and some tweaks in the organisational structure Infosys is expected to kick-start under the leadership of Murthy.

The first priority of Murthy, according to Shibulal, is superior financial performance. The other critical task before him is to get back predictability in business performance, which had been the big differentiating factor for the company.

As a part of the new strategy, Infosys is now focusing on large deals which would help in improving the predictability over the business.

"We have some challenges going ahead. Our growth has been volatile; our margins are under pressure. We have given a compensation hike, and that itself would impact our margin by 300 basis points. Hence, it is always good to have a person like Mr. Murthy," said Shibulal.

As a part of the new strategy, Infosys is now focusing on large deals which would help in improving the predictability over the business. The company has started refocusing on the bread and butter application development and maintenance (ADM) business which had been slowing over the past few quarters, dragging the growth of the company.

According to Peter Bendor-Samuel, founder & chief executive officer of management consulting firm Everest Group, Infosys's renewed focus on traditional businesses is the right approach in the given situation. "Infosys would be more successful in trying to grow their traditional business rather than the software-based models they were trying to focus on," Bendor-Samuel said.

He, however, said it would not be free of challenges. "The large transactions in the traditional space might be difficult to come by as everyone is going after them. In the applications space, which forms the traditional business for the company, large number of transactions are dwindling as the space is maturing," he added.

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