Bengaluru: When B.G. Srinivas, the man who everybody expected would become the next CEO of India’s second largest IT outsourcing company Infosys, suddenly quit the company a week ago, the joke on social media was, “We don’t know who is facing a bigger leadership crisis — Congress party or Infosys?”
That should be galling for a company — and its iconic founder — that thought about leadership issues much more than most other Indian companies and even built the elite Infosys Leadership Institute that prepares executives for higher roles. It did build leaders — by the company’s numbers, some 1,600 of them so far.
But when a dozen of the top leaders leave — an average of one potential CEO or CXO-level candidate every month since founder N.R. Narayana Murthy returned to the helm to fix what was then seen as Infosys’ growth problem — and more are expected to quit in the coming weeks and months — unease about what is happening at a one-time darling of the bourses and masses is bound to rise: What exactly is happening at Infosys, and why? Where is it heading? How can this be happening with NRN at the helm?
That the exits at the top are happening despite a turnaround in Infosys’ fortunes — the company’s growth rate has doubled to 11.5 per cent, it has won a record number of clients, 238, in the last year, and the stock price has gone up over 20 per cent — is a sign that Infosys’ troubles are something other than growth.
And it seems, from this newspaper’s conversations with analysts and former executives of Infosys and its peers, that what’s wrong at Infosys might have its roots in what Mr. Murthy did right in earlier years, which in fact made Brand Infosys.
“Mr. Murthy gave ESOPs, made multi-millionaires, some 5,000-10,000 of them”, said Zinnov Consulting’s Sundararaman Vishwa-nathan. “See, by the time you are 40-45, if you are worth '20-50 crore, have a couple of villas or flats in Bengaluru, farmhouses, big cars, etc, you don’t have to work for a living anymore. The motivation to perform drops”.
On top of that, he says, Infosys created stars, gave them dreams, and a feeling of entitlement. Ironically, its leadership training, again something that Mr. Murthy began with the best of intentions, may be to blame. “It seems everybody feels that he’s CEO/CXO material. But only one person can be CEO. It’s troubling that they simply leave when denied that. It shows that Infosys has a deep problem of culture. TCS and Wipro do not make millionaires, and their employees do not have stars in their eyes. Infosys’s problem is its larger-than-life leaders.”
Is that why Mr. Murthy seems to be at ease while the rest of the world worries about the exodus from his company? “NRN has repeatedly indicated that the top guys were having a party, and so this attrition is good”, says Ankita Somani, research analyst at MSFT.
Crucially, Infosys is carrying out third-party evaluations not only for CEO selection, but has extended it to lower levels. Promotions will be based on these evaluations, which has made several executives uncertain of their future in the company.
A former Infosys executive, who had the largest number of employees reporting to him, concurred. “In the last two years, trust levels have come down. Political friction at the top flows down to lower levels, pressure is transferred. All that hurts.”
A former Wipro senior vice president, who said he identified himself as “part of the problem at the company and quit so that the new CEO who was coming in at the time could transform the company”, said Mr. Murthy may be on the right track. “Companies at different stages have to transform in different ways. At the size of Infosys, it’s not just the CEO who must change, the next hundred senior executives must also go. The entire management must change”.
“Companies such as Infosys face the question: How do you make the job the centre of focus rather than money and position. At TCS, there are no multi-millionaires at 40. No one thinks he is a potential CEO till he is 50. And, except for the CEO’s appointment, those of heads of business units are process-oriented”, he said.
