Business Today

Fatal Attractions

A glimpse into the working style of India's star IT salesman, who is embroiled in a sexual harassment case for the third time.
twitter-logo Goutam Das        Print Edition: June 23, 2013

Four years ago, Phaneesh Murthy realised he'd become a bit chunky and began a punishing gym programme. But sticking to an exercise schedule wasn't easy because the chief of IT outsourcing company iGate Corp travelled about 20 days a month. So, Murthy bought a pair of cheap canvas running shoes that fit easily into his travel bag - and began running in every city he visited on work. Determined to shed those extra pounds, he even ignored security warnings from colleagues and ran in cities such as Guadalajara in Mexico where abductions by criminal gangs are common. Six months later, he had dropped a couple of sizes.

Murthy has always been obsessed with the idea of winning. And, for the most part, he's been a winner. He won massive contracts from Apple Inc for his previous employer Infosys and grew iGate from a virtually unknown company before 2003 to a billion-dollar entity today. At one time, the man often called the "other Murthy" at Infosys was tipped to succeed Nandan Nilekani as CEO of the leading software services exporter. (N.R. Narayana Murthy is executive chairman and co-founder of Infosys.) "Professionally, I doubt if there is anybody as savvy as Phaneesh," says Bala Palamadai, a former Infosys executive who Murthy recruited in 1999.

But last month iGate sacked Murthy after a company sexual harassment investigation revealed he had not disclosed a relationship with a subordinate employee. The US-based firm said he had violated company policy and his employment contract by not disclosing the information. It did not name the employee who had accused him of sexual harassment and said Murthy had not violated iGate's harassment policy.

But California-based law firm Aiman-Smith & Marcy said in a statement iGate's investor relations head, Araceli Roiz, was pregnant with Murthy's child and would sue him for sexual harassment. Murthy said the case was an attempt at extortion. "Without question, it is a case of extortion. Ever since the first case became public, everybody feels that they have an absolutely easy way to collect money on whatever pretext," he told journalists during a teleconference on May 22. "The intent will be to contest it vigorously if there is a lawsuit filed."

Murthy says Araceli Roiz's sexual harassment accusation is an attempt at extortion

Some former colleagues say Roiz often travelled with Murthy on investor conferences. According to them, she stayed in the same hotel as him and other board members even though she was not entitled to five-star accommodation. Murthy told Business Today in an email the question of whether Roiz received disproportionate favours should be answered by the company. iGate did not respond to email queries. According to Roiz's lawyers, Murthy began pursuing her shortly after her employment began in 2010.

This is the second time the high-profile 49-year-old infotech industry executive - who is married to fellow IIM Ahmedabad alumna Jaya and has two children - has lost his job following accusations of sexual harassment. Eleven years ago, Infosys asked him to quit after his assistant in the US, Reka Maximovitch, accused him of sexual harassment. Murthy denied the accusation. Infosys reached an out-of-court settlement with Maximovitch for $3 million. A year later, another Infosys employee in the US, Jennifer Griffith, filed a similar case against Murthy. The case was eventually settled for $800,000. He paid $400,000 and Infosys' insurance company paid the other half.

Still, some former colleagues say Murthy does not have a glad eye but attracts people - and not just women - with his intellect. They say he charms everybody from employers and clients to analysts and journalists with his sharp mind. "He was always respectful and well-behaved. His personal assistants were women. There were many women in his team. He is not a guy to force himself on a woman. He mostly tried attracting them through his intellectual ability," says a former iGate employee, who worked closely with him. But others also claim that women employees often got an excessive amount of attention and mentoring from him - while he could be very curt with male employees.

Murthy's professional rise was certainly meteoric. He got a break with IT company Sonata Software soon after graduating from the Indian Institute of Management, Ahmedabad, in 1987. "I was impressed by his confidence. At a time when very few chose the software industry as a career, he was willing to tread a different path," says B.Ramaswamy, former Sonata Software Managing Director who recruited Murthy.

At the time, Sonata was making one of India's earliest business software systems and was unprofitable. Ramaswamy says Murthy started work on marketing the new system the first day he arrived in a Maruti 800. "Software products were mostly unheard of in the 1980s. He managed to segment the market well, simplify the usage for small businesses, articulate the value proposition and convince many to buy. In a year's time, Sonata broke even on the back of only this product," he adds.

Murthy carried the same marketing savvy to Infosys, his next employer. As the company's head of sales, he helped the software exporter grow exponentially from a meagre $2 million in the early 1990s to $545 million by the time he quit in 2002. In the 1990s, Murthy used to handpick people. He hired 40 employees from banks and consumer goods firms and sent them to the US to sell. "He pioneered the relationship-based selling model," says Palamadai, who now runs a consulting firm in Chicago. "All IT companies were using delivery folk to sell before that."

In 1995, he dramatically changed the industry's dynamics when he bagged a multinational client at $24 an hour at a time when Indian IT companies were doing business with US clients at $14 to $18.  "Phaneesh could sell anything. He managed to position Infosys well, take fast decisions and set new benchmarks for the whole industry," says T.V. Mohandas Pai, former board member of the company.

Former colleagues say Murthy was a brilliant salesman and strategist whose obsession with winning extended beyond the corner room

At iGate too, Murthy always thought big and rivals said he was looking at ways to get back at Infosys. When the Satyam scandal broke in 2008/09, he wanted to buy out the company. Palamadai, who was heading sales for a Satyam team in 2008, went to Murthy to discuss the possibility of a management buyout. "But then Murthy backed out because the company's financial situation was uncertain," says Palamadai.

Murthy finally got his chance in 2011 when he acquired Patni Computer Systems for $1.22 billion. The acquisition pushed iGate's revenues up from just $300 million to over a billion dollars in 2012.  In his final months at the company, Murthy was aggressively pushing a new billing model based on charging customers for business results instead of man hours, the traditional model used by the Indian infotech industry.

Former colleagues say Murthy was a brilliant salesman and strategist whose obsession with winning extended beyond the corner room. "He often challenged employees to play badminton with him and beat them. In cases where he lost, he never accepted defeat gracefully," says a former colleague. "In frisbee games, he often got aggressive and physical when he was on the losing side. He came across as a bully on the playfield."

According to former colleagues, Murthy was not a big spender and never entertained employees extravagantly or wore expensive clothes. He grew up in a middle-class family of engineers in a traditional Bangalore neighbourhood. "He hardly takes employees out for dinner; and when he does, particularly in the US, he prefers unlimited salad restaurants priced between $8 and $10 a plate," says the former colleague.

So what explains his reckless, self destructive pursuit of particular women - one that has cost him a brilliant career twice over? Business Today queried the head of the University of California's Berkeley Social Interaction Lab, Dacher Keltner, who is working on a book on the psychology of power. "When we have power it makes us impulsive, and we thoughtlessly pursue our desires, without attention to the consequences," says Keltner in an email response. "Human behaviour is the outcome of the balance of two neural systems, the 'approach' system, which intensifies impulsive behaviour, and the 'inhibition' system, which warns of potential threats from such behaviour. Power alters the neural balance in favour of the approach system."

John Agno, a well known US-based business coach, also mentions a syndrome he calls the 'CEO disease'. It describes the condition of a CEO whose juniors are reluctant to point out worst case scenarios to him, one who has surrounded himself with sycophants. It is worth noting again that Roiz's relationship with Murthy was an open secret at iGate, but no one thought of warning Murthy. "If asked to coach a CEO with CEO disease, I would decline.  Having CEO disease is a strong indication that the person cannot be coached," says Agno.

One question that many people are now asking: is this the end of Murthy's career? Nobody has any answers.

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