Infosys spat: The founder's 'interference'

India's second-largest IT services firm has witnessed a blame-game between Murthy and Sikka

Amid the ongoing bruising saga between Infosys founder N R Narayana Murthy on the one side and outgoing CEO Vishal Sikka/the board on the other, an Economic Times poll revealed that the former seems to be winning the battle of perception. “About a third of the respondents within the IT sector favoured Murthy’s position while only less than a fifth or 18 per cent favoured Sikka’s position,” the paper reported.

The poll must have brought some succour to Murthy who has been singularly blamed for the rapid fall in the company’s stock price since Sikka’s ouster. Even as the scrip has recovered in recent days, analysts continue to sing the former SAP executive’s praises as a bold reformer who could have taken Infy into the new digital era if only the founders, especially Murthy, would have let him.

Parallels have also been made with Cyrus Mistry’s sacking from the Tata group last year, when a distinguished member of another old guard, Ratan Tata, orchestrated a bloodless coup by harking to his and the group’s legacy. Both Sikka and Mistry were picked with the blessings of those who can no longer find any merit in their capabilities, and this has raised more questions.

A discussion on CNBC-TV18 centred on the age-old question of whether founders should take an active interest in the organisation once they have hung up their boots. The issue is especially relevant in Infy’s case because through the years, Murthy has been categorical about the separation between church and state, viz, the promoters and the professionals who run the company. 

There remains the fact that so long as the promoters were in charge, Infy’s running had not been an issue, even if the company failed to anticipate the challenges of a changing scape. It is widely believed that Sikka was brought in not merely for his stellar record and deep relationships with clients across the IT spectrum but because the last promoter-CEO of the firm, S D Shibulal, had failed to come up with a plan to charter the company through increasingly rough waters.

Infosys co-founder N R Narayana Murthy

Besides, Murthy’s own actions have furthered the impression of a hands-off leader. When he brought his son, Rohan, as an executive assistant during his brief return to the company a few years ago, Murthy was pained by whispers in the media that he was diluting his stated aim to keep the running of Infy in professional hands. Within a year, Rohan left his position as did Murthy, and this was followed by the beginning of Sikka’s tenure.

Murthy’s “interference” should be seen in this backdrop. In a country where family businesses have a tough time professionalising, Murthy’s evangelism of the separation of the two and his willingness to walk the talk are now suddenly in doubt. Some have even wondered if he is in danger of losing his reputation for rectitude by showing that he is, after all, as vulnerable to the pulls of ownership as other, lesser honchos.

While the last word on the contretemps is yet to be heard, these questions do Murthy disservice. Doubts about Panaya and the compensation awarded to some senior executives are serious issues that no company ought to brush under the carpet. In its defence, the Sikka camp, which includes chairman R Seshasayee, has brought up the external probe that found nothing amiss in the company’s governance. Yet, full clarity on the matter has been lacking, and the founders’ demand to make the probe report public has not been met.

The other issue for which Murthy has drawn flak is the public nature of his outrage. Why, some have asked, could he not have raised these issues in company fora, behind closed doors, instead of washing dirty linen in public? This is a legitimate grievance, but one wonders if that would have helped matters, given how even the public nature of the controversy has yielded little clarity on the accusations Murthy made.

Inevitably, in these situations, both sides gird up their loins and prepare for the long haul. While the company attempts to douse the crisis, things are likely to remain in flux, given Sikka will be with the company for a good six months. For an indication of how this will go down, we need look no further than Bombay House, whose latest salvo has barred Shapoorji Pallonji Group companies from doing any business with the Tatas.

And it is this comparison that may ultimately be Murthy’s strongest support. The Tatas, much to the chagrin of those who have long praised the group for its integrity, have failed to disclose the real reasons for Mistry’s departure. One gets the impression that Mistry’s only error was that he got on Ratan Tata’s wrong side, and that this was enough for him to go. For all his infuriating nitpicking, Murthy could not have been more specific about what he feels ails the company he founded.

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