Business Today

Narayana Murthy returns to Infosys's rescue

Questions have been raised about induction of Rohan Murty into his team but its co-founder says his son will help connect him to the youth.

twitter-logoGoutam Das | June 4, 2013 | Updated 00:06 IST

India's third largest IT services exporter Infosys on Saturday announced it appointed retired co-founder and the Chairman Emeritus of the company, N R Narayana Murthy, as its Executive Chairman.

Murthy's appointment comes after the company's performance slipped over the last two years and amidst lower than industry growth - quite unusual for a company known to set industry standards. In the IT industry's pecking order, Infosys lost the No. 2 spot to Cognizant in 2012.  

Infosys, during a hurriedly called press conference at its Electronic City campus, said the Board listened to everybody's wishes, including shareholders, in inviting and urging Murthy to come out of his retirement. Murthy retired from Infosys in August 2011 but has not held an executive role in the last seven years.

Archive:  'Is Infosys missing Narayana Murthy?
The possibility of Murthy coming back to lead the company again was in the air for some time. Business Today, in a cover story, 'Missing Murthy', dated February 17 this year, wrote about how Infosys was hurting with its co-founders Murthy and Nandan Nilekani out of the company. Investors and former employees often commented on how the company was fast losing credibility, by guiding growth far lower than Nasscom's average projections.

Globally, a spectacular example of success with a founder coming back to turn around a company is Steve Jobs in Apple. A not so successful example is Michael Dell's return to Dell.

Murthy's appointment rejigs the company's top-heavy structure. While Murthy was Chairman Emeritus, the company had a non-executive Chairman in K.V. Kamath and an executive chair in co-founder Kris Gopalakrishnan. K V Kamath would step down from his position as Chairman of the Board and take up the position of Lead Independent Director effective June 1. Gopalakrishnan would be re-designated Executive Vice Chairman.

Another significant announcement was the appointment of Murthy's son, Rohan Murty, as his executive assistant. This is a departure from the stand taken by all the founders of the company who always maintained that their children would never join Infosys.

"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, Dr. Rohan Murty," a press statement stated.  

Archive:  Exclusive interview with Narayana Murthy
During the press meet, Murthy defended the appointment of his son, saying he will have no leadership role and his only job is to make him more effective. "I have been away from executive responsibilities for the last seven years. Therefore, I am not as much in touch with the youth of Infosys. Second, post my retirement period, I set apart time for doing things that I enjoyed most with youngsters. I enjoyed working with them. Therefore, when I was requested by the Board to come back, I realized that the quickest and best way of me being effective and to add value to the company is by utilizing the competencies of a small team of people that I have been interacting with in the last two-three years. One of them happens to be my son Rohan," he said. Murthy added that there are executive directors on the Board and other competent people in the company for leadership.  

The retirement age for the Executive Chairman has now been extended to 75. Murthy, 67, will have a tenure of five years commencing June 1. Murthy joked he wanted to be like cricketer Sachin Tendulkar, who could add value to the company even at an advanced age.

For the moment, the company has left CEO S.D. Shibulal's position untouched and has not reconsidered the position of the Chief Operating Officer that was done away with after Shibulal became CEO. Murthy said he would try and add "value" to the CEO, like he did in previous years. He did not elaborate on what exactly his recipe would be to bring the company back on track. Murthy, during the press conference, largely reiterated the company's Infosys 3.0 strategy of focussing on consulting, products and platforms as well as application development maintenance projects. "You need to focus on large apps development, maintenance, validation and infrastructure management projects," is all the new Chairman would say as of now.  

The company commented that it was going through challenging times but Murthy appeared reluctant to comment on how bad things really were at the company.

"It has just been five hours. It is not fair to comment or come out with an idea before studying everything properly," he said when he was asked about his priorities in the new role.

Murthy added he was approached by Kamath in May this year to consider coming out of retirement. "Given the Board's keenness and my parental attachment to Infosys, I have accepted this request to be back as the Executive Chairman after a gap of seven years. I have decided to suspend my retirement and several work-in-progress projects I have been involved in these past few years," he said.

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