N. R. Narayana Murthy has been reappointed as the executive chairman of the board. Photo: Mint
Live Mint :Pankaj Mishra : Sat, Jun 01 2013. 11 43 AM IST
Narayana Murthy’s son Rohan Murthy too would join the company as his executive assistant
Bangalore: Nearly seven years after he stepped down from all executive roles at Infosys Ltd., the company’s iconic founder N. R. Narayana Murthy has been reappointed as the executive chairman of the board, replacing the new leadership led by ICICI Bank Ltdchairman K. V. Kamath put in place in August 2011 that failed to help the company regain its bellwether status in India’s $108 billion information technology industry.
“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. I am grateful to Mr. K V Kamath—the chairman, the board, and every Infoscion for giving me this opportunity. I intend to do my best to add value to the Company in this challenging situation,” Narayana Murthy said in a statement.
The Board will take up in its meeting on 15 June 2013, the resolutions for convening an extraordinary general meeting within the requisite period, in order to seek approval from the shareholders for appointing him as the executive chairman and whole-time director for a period of five years commencing on 1 June 2013, Infosys said in a statement. During his five year term, Narayana Murthy would draw a token compensation of Rs.1 per year.
Founded in 1981 by Narayana Murthy and six others, including Nandan Nilekani, S. Gopalakrishnan andS. D. Shibulal, Infosys was considered the bellwether of India’s $108 billion information technology (IT) sector until three years ago.
In the past two years, the company has missed its revenue and profit growth forecasts several times and has been overtaken by Cognizant Technology Solutions Corp. in annual revenue. It also pursued the new 3.0 strategy doggedly in an environment when outsourcing customers are only looking to save costs.
Last year, Infosys missed the lower end of its revenue forecast at least twice and stopped giving quarterly forecasts. The sluggish growth rates and increasingly impatient investors prompted Infosys to re-examine its strategy and it started cutting prices for select clients. The company also entered into revenue-sharing agreements with companies such as IPsoft Inc. to drive up business volumes, even at the cost of margins.
In an interview with Mint on 7 May Narayana Murthy had denied any plans to come back at Infosys, but added that it’s “difficult to predict what will happen tomorrow”. Narayana Murthy, 66, who served as chief executive officer (CEO) from 1981 to 2002 and as chairman from 2002 to 2011, said he has no immediate plans to do so.
“At this stage, looking at the data that I have, I wouldn’t say that. So, who knows what happens in the future, I am not gone, cannot say what I will do tomorrow, I may not be there tomorrow morning. So, it is not possible for me to predict what will happen tomorrow,” Narayana Murthy had said.
“The Board has taken this step keeping in mind the challenges that the technology industry and the company faces and in the interest of all stakeholders, particularly shareholders large and small, who have asked for strengthening of the executive leadership during this challenging time. Narayana Murthy’s entrepreneurial and leadership record and the long experience he has had as a technology pioneer makes him eminently qualified to lead the company and provide strategic direction at this point in time,” said Kamath.
The challenge for the Infosys board is to ensure that the company does not become an outlier in an industry where top firms including Tata Consultancy Services Ltd, HCL Technologies Ltd and Cognizant continue to gain market share in the same industry, serving similar customers.
Experts had raised questions about the Infosys 3.0 strategy being pursued by CEO Shibulal.
Experts such as Partha Iyengar, who heads research at Gartner Inc.’s India office, said recently Infosys’s pessimistic stance at the beginning of the year is a cause for concern and it’s time the board gets aggressive.
“If you’re in a position of strength and you’re making changes, then it’s alright. But when your position is weak, you should not be making drastic changes. They made those changes at a time when they came to the realization that the market doesn’t see them at a premium,” said Iyengar.
In another significant departure from the rules imposed by Narayana Murthy himself, the company said his son Rohan Murthy too would join the company.
In order to function more effectively Narayana Murthy intends to create the chairman’s office to assist him during his tenure and has requested the board to permit him to put together a team for this function. The team will include his son, Rohan Murthy, as Narayana Murthy’s executive assistant, Infosys said in a statement.
If appointed, Rohan Murthy’s term as executive assistant to the chairman would be co-terminus with that of Narayana Murthy. Rohan Murthy has requested that he should also be paid only a token compensation of Rs.1 per year, the company added.
Infosys on Saturday announced that the company has appointed NR Narayana Murthy into the board and executive leadership of the company. The company said in a press release that Murthy has been appointed Executive Chairman of the Board and Additional director with effect from June 1, 2013.
K.V.Kamath would step down from his position as chairman of the board and take up position of lead Independent director effective June 1, 2013.
S Gopalakrishnan would be re-designated Executive vice chairman effective June 1, 2013 and would primarily focus on key client relationships and broader industry issues. S D Shibulal would continue to be the Managing Director and CEO.
K.V.Kamath would step down from his position as chairman of the board and take up position of lead Independent director effective June 1, 2013.
S Gopalakrishnan would be re-designated Executive vice chairman effective June 1, 2013 and would primarily focus on key client relationships and broader industry issues. S D Shibulal would continue to be the Managing Director and CEO.
Murthy's appointment as a director would be placed for the consideration of the company's shareholders in the Annual General Meeting (AGM) on June 15, 2013. Subject to his election as a director at the AGM, the board will take up in its meeting on June 15, 2013, the resolutions for convening an extraordinary general meeting within the requisite period, in order to seek approval from the shareholders for appointing him as the Executive Chairman and Whole-time Director for a period of five years commencing on June 1, 2013.
N R Narayana Murthy said, "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. I am grateful to K V Kamath - the Chairman, the Board, and every Infoscion for giving me this opportunity. I intend to do my best to add value to the Company in this challenging situation."
During his five year teunre, Murthy would draw a token compensation of Rupee One per year.
The press release further said, "In order to function more effectively, Narayana Murthy intends to create the Chairman's office to assist him during his tenure and has requested the Board to permit him to put together a team for this function. The team will include his son, Rohan Murty, as Narayana Murthy's executive assistant."
Business Today in its Feb 1, 2013 edition and cover story 'Is Infosys missing Narayana Murthy?' had reported that Infosys, a company that grew from a seven man start-up in 1981 to the 155,629 person, $7 billion enterprise it is today, has time and again been called India's most admired and respected company. But its halo has dimmed.
An internal restructuring, a leadership vacuum, complacency towards customers, rigid contracting terms, and a stubborn high-margin pricing model have made recording growth at Infosys as difficult as walking on wet tar. So much so, the company is now struggling to beat even the average industry growth rates. Its bigger rival, Tata Consultancy Services (TCS), has pulled away and widened its revenue lead by about $3 billion, while third-placed Cognizant has already overtaken Infosys in terms of quarterly revenues in the June and September quarters of 2012.
N R Narayana Murthy said, "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. I am grateful to K V Kamath - the Chairman, the Board, and every Infoscion for giving me this opportunity. I intend to do my best to add value to the Company in this challenging situation."
During his five year teunre, Murthy would draw a token compensation of Rupee One per year.
The press release further said, "In order to function more effectively, Narayana Murthy intends to create the Chairman's office to assist him during his tenure and has requested the Board to permit him to put together a team for this function. The team will include his son, Rohan Murty, as Narayana Murthy's executive assistant."
Business Today in its Feb 1, 2013 edition and cover story 'Is Infosys missing Narayana Murthy?' had reported that Infosys, a company that grew from a seven man start-up in 1981 to the 155,629 person, $7 billion enterprise it is today, has time and again been called India's most admired and respected company. But its halo has dimmed.
An internal restructuring, a leadership vacuum, complacency towards customers, rigid contracting terms, and a stubborn high-margin pricing model have made recording growth at Infosys as difficult as walking on wet tar. So much so, the company is now struggling to beat even the average industry growth rates. Its bigger rival, Tata Consultancy Services (TCS), has pulled away and widened its revenue lead by about $3 billion, while third-placed Cognizant has already overtaken Infosys in terms of quarterly revenues in the June and September quarters of 2012.
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