"Being accused of violating our own high standard of business ethics recently made me lose several nights of sleep," he wrote, bidding an emotional farewell to his shareholders in a letter published on Tuesday in the company's annual report.
A long-term Infosys employee and the head of human resources, Mohandas Pai recently quit the IT giant after being passed over for the CEO job. He later went on to criticise the company's policy of choosing only founding members for the top posts.
The apparent importance given to seniority over merit has also been criticised elsewhere but outgoing Chairman Murthy has always denied having a commandment of only founders getting the top job one after the other.
Infosys was also accused by an American employee of the company of systematic visa and tax fraud to increase profits. A man with a squeaky-clean image, Murthy apparently was disturbed by the charge.
The company, which he founded in 1981 with $250 and today commands over $6 billion in revenue, on Apr 30 had announced a management rejig where banker K V Kamath was announced as the new chairman, the first 'outsider' to hold the post.