One icon replaced another when K.V. Kamath took over from N.R. Narayana Murthy as Infosys' Non-Executive Chairman in 2011. As the Managing Director and CEO of ICICI Bank, Kamath had played a vital part in turning the bank around. Will he have to perform an action replay at Infosys, which has lost momentum over the last two years? In an interview to Business Today's Chaitanya Kalbag, Kamath talks about succession at the company, leadership, and possible course corrections required.
Q: Infosys has been without a Chief Operating Officer for some time now and people feel there is a lack of clear visibility on who will succeed current CEO S.D. Shibulal. The company is also trying to implement the Infosys 3.0 strategy. Do you have any concerns about the way things are going?
A: I will put everything in context. Let me start with the shape of the industry and where Infosys is now and how it is evolving as we look at the industry evolving. First, I look at the company from the outside. What I admire about the company is that from the 1980s to date, it has virtually reinvented itself as the tech industry moved from the time when a mainframe took up a whole building to a time when a mainframe is in your pocket today. The PDA (personal digital assistant) in our pockets is the mainframe of 30 years back. So it has navigated all the shifts, I think with great confidence. So I believe that evolution in technology continues, Moore's law is active and well...we will have to be prepared for a world which will be as active in terms of transformation in the technology space as in the past, if not more. So clearly this transformation continues and we will need to transform. Every single tech company in the country or anywhere in the world will need to do the same. I think it is a given and we will need to respond to that.
The second thing is really in terms of people, processes and structures. Infosys, of course, had the founder team. What distinguished the team from other founder teams is that its members were not only entrepreneurial, they were also professionals. In fact they were professionals first and then became entrepreneurs. They developed a very large pyramid of competent people who have been actually well recognised within the organisation. We have now four people on the board who are executive directors. There is Srinath (Batni), there is Bala (V. Balakrishnan), there is Ashok (Vemuri) and there is B.G. (Srinivas). Then you have at the next level, just below the board but participating in board meetings as appropriate, the Executive Council which is a wider set of people. So there is a large corps of senior leaders who actually lend support to the businesses.
The next layer provides further depth. So there is vast depth in terms of leadership that one could look at. So clearly from the time when Mr Murthy was chairman, what we had done was make sure that the nomination committee report played the principal role in all board matters including appointment of the CEO and that is what the nomination committee will do. As of now, I think there is sufficient time for the committee to start working on it and I am sure that at the appropriate time it will work on this process. The current practice globally is that you don't look for the leader at the last minute. You have to start the process sufficiently early to make sure that you look at all the people within an organisation - or outside if necessary - to make sure that you have the best leader to succeed and the nomination committee will keep that in mind as and when it starts the process.
Q: One of the concerns some analysts have expressed is about the nature of the leadership. Mr. Murthy and Nandan Nilekani were considered more of the strategic sort of people whereas both Kris Gopalakrishnan and Shibulal are considered more technologically oriented. There is a feeling that the company needs very strong customer connections and that has started fading.
A: My belief is that anybody who becomes a CEO has to tick several boxes - how entrepreneurial is he, how technically strong is he, how strong is he in the context of governance, how strong is he in managing peers, how strong is he in managing the external environment, what I call the emotional maturity of a person. He has to tick all these boxes including entrepreneurship. What happens is that with some people some boxes score much higher than others and the board, typically the nomination committee, during the selection process tries to make sure the balance is right, and ultimately works. I have always found that a person who is otherwise good has some other weaknesses which are made up for in course of time. So I am sure that this will done by the nomination committee as it moves ahead.
On margins, I agree with what Mr Murthy has said. We will not compromise quality, we will not compromise our approach. Having said that there are things we can improve, which immediately changes the context as it were. One is bench utilisation. For a variety of reasons in the last one year or so our bench utilisation has been lower than the competition. We are working on this to see how we could change this utilisation level and I am sure we will watch in the next four quarters what the outcome of the effort the executive team puts in on this, is. I think broadly, the strategy remains as articulated. Within that, course corrections certainly will be made and need to be made by any company. I don't think Infosys has a closed mind on those course corrections.
Q: There has been an innate conservatism in the company. Infosys is sitting on a big pile of cash but it does not go about making acquisitions. It seems very cautious about the way it uses the money. Do you feel that there needs to be a change in attitude?
A: I would say Infosys clearly has an open mind, but in this business the chances of making a mistake are bigger than the chances of not making a mistake, particularly in acquisitions, as some very bold acquisitions made by global companies have revealed. So there is need for caution. I think the Lodestone acquisition which it made has clearly turned out to be the right bet, but clearly in the current context, nobody will rush into an acquisition just because we are sitting on cash.
Q: How do you think the company should realign in terms of the changing environment?
A: I believe in methods whereby managements chart out their own paths and in the last quarter they have done that because even if we keep the Lodestone acquisition numbers out, I think they did report very healthy growth in the top line. So we will need to see how it works out in the coming quarters and make sure that if course correction is required, open a debate on that, put that in the minds of people and then watch. Let us give them some time and see what happens. I think we are on that path and now we will have to give time to the executive directors to come out with the results.
Q: There is also a feeling that Infosys is top heavy with a Chairman Emeritus of Mr. Murthy's stature. Then you have yourself as Non- Executive Chairman and Executive Co- Chairman in Kris. So in effect the CEO has three chairmen above him…
A: Not really. Murthy, the day he stepped out, made it very clear that he is available to give advice if asked and I must say to his credit he has stuck by what he has said and that gives enormous space to the CEO. As far as I am concerned, I will be running the board processes and the governance along with the Executive Co-Chair if necessary. That is what I have been doing and the board has very clearly laid down the functions of the Executive Co- Chair and the CEO. So there is no issue of the CEO feeling in any way hemmed in. Also, this is a team which has worked together - Kris and Shibu - so I don't see any such feelings at all.