Blaming a “continuous drumbeat of distractions” and a long-running row with founders over the tech firm’s strategy, Vishal Sikka, the man who was brought in three years ago to scale Infosys to great heights, resigned all of a sudden. He had set an ambitious 2020 revenue target of $20 billion for Infosys. The board is attacking the renowned industrialist and co-founder of Infosys, Narayana Murthy.
The departure of Mr Sikka, spooked Infosys’ investors. Shares fell more than 13 percent to a three-year low of 884.20 rupees, wiping about $4.85 billion off the No.2 IT services firm’s market value. Mr Murthy said he was “extremely anguished by the allegations, tone and tenor of the statements” and that his main concern was the deteriorating standard of corporate governance.
“Mr. Murthy’s continuous assault, including this latest letter, is the primary reason that the CEO, Dr. Vishal Sikka, has resigned despite strong board support,” said a statement by Infosys to stock exchanges on Friday. “Mr. Murthy’s campaign against the board and the company has had the unfortunate effect to undermine the company’s efforts to transform itself. The board has been engaged in a dialogue with the founder to resolve his concerns over the course of a year, trying earnestly to find feasible solutions within the boundaries of law and without compromising its independence. These dialogues have unfortunately not been successful.”
Infosys co-chairman Ravi Venkatesan said later in an investor call that the company had no intention of asking Murthy to play a role in the governance of the company—reversing his and the company’s earlier position of wanting to reach out to Murthy and offer him a formal role on the board, according to an interview to a TV channel last week.
According to at least two people directly aware of the developments, the board’s decision to issue the scathing statement on Murthy was not unanimous, but rather a majority decision—a clear sign that this tussle with the founder will test the unity of Infosys’s board over the coming weeks and months.
Is this the beginning of the end for Infosys? Only time will tell!