A new low at Infosys

Vishal Sikka’s resignation as Infosys CEO brings to the fore the ugliness at Infosys and deterioration in India’s troubled IT sector. Amidst reports of mass layoffs, India faces lower job creation in the technology sector and a steep fall in export revenue. Factors pulling down the IT sector, which once made every Indian proud, include the threat of automation, Brexit, the UK’s increased visa costs, and US President Trump’s “Buy American and Hire American” response to globalisation. The enveloping crisis should have prompted a collective industry-government effort to face the challenge. Instead, the country’s top technology man, NR Narayana Murthy, is embroiled in nasty bickering over the way Infosys, the company he founded, should be run.

It is apparently difficult for former CEOs to enjoy their days of retirement. Loss of power is hard to accept. Earlier, the country witnessed a public row between Ratan Tata and Cyrus Mistry, which the Tata group bruised. Now Narayana Murthy is injuring not just his own reputation but also that of Infosys. The founders have failed to appreciate that their days of running the company are over and there is a new board and a new CEO at the helm who may not like anyone breathing down his neck on a day-to-day basis. As shareholders holding a 12.75 per cent stake in the company, the founders are entitled to point out wrongs in governance. But shareholder activism is one thing, running down the CEO and letting loose, as Vishal Sikka puts it, a “continuous drumbeat of distractions” is another. The market verdict is that under Sikka, Infosys has performed better than its rival, TCS. 

The day the wrangling surfaced the company share tanked 10 per cent. The Infosys board tried damage control on Sunday with a Rs 13,000-crore share buyback. But the cheer may not spread as reports indicate the board is faced with investigations over unlawful business practices, including a securities fraud, in the US. Whatever Narayana Murthy’s justification for his unwarranted interference, the company shareholders have suffered a huge destruction of wealth.