Millennium Post

'Cyrus' moment at Infosys

Infosys chief executive officer (CEO) Vishal Sikka's resignation soon after completing 3-years at Infosys wasn't exactly a bolt out of the blue. It is being understood as the fallout of an endless tussle between the company board and founder-shareholders, especially NR Narayana Murthy, over governance issues. It came as no surprise that Sikka along with the company's board has named and blamed the IT behemoth's founder and former Chairman Narayana Murthy as the reason behind the California-based tech boss' surprise resignation. The $10-billion company's growth trajectory has witnessed a downward spiral after having surged in Sikka's first two years.

Consequently, Infosys' share price has slumped from the lofty heights it had touched mid-last year. Sikka has, since the very outset, enunciated a dual strategy—to renew the traditional business with automation and develop new businesses around the new digital technologies such as cloud, AI/machine learning, analytics, big data, and internet-of-things. The bad blood between Sikka, the first non-promoter CEO of Infosys, and a section of the IT major's promoter-shareholders, led by Narayana Murthy, became pretty apparent in the beginning of the year as promoters began voicing concerns over what they saw as deteriorating governance and values of the company.

Industry experts are of the view that certain factors may have forced Sikka's hand. A steep hike in Sikka's compensation early last year set the cat among the pigeons. The company says Sikka's cash compensation actually went down and the increase has been primarily in RSUs (restricted stock units) and stock options, which are directly linked to incredibly steep goals. Former CFO Rajiv Bansal's astronomical severance pay of Rs 17.4 crore also caused a great deal of heartburn. Sikka has said all along that Indian IT's older businesses of application development & maintenance, infrastructure management and BPO are slowing and the margins are falling. He was a strong votary of innovation and offering value-added services. This necessitated acquisitions. Some founders were not kindly predisposed to the acquisition-based business model. Of late, the chasm between the board and the founders widened over investigations into several decisions made by the company. Murthy shot off a mail to the board, demanding to make the investigation reports public. Infosys had its Cyrus moment on Friday. More drama is sure to unfold.

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