Trouble at Infosys

Just as we were coming to terms with the possibility, that the events at Tata group, which have been making news for all the wrong reasons since September last, were an aberration where corporate governance at such sanctified organizations are concerned, we were delivered with another bombshell today, through Economic Times.

The front page headline had an icon of IT industry, Shri N.R. Narayana Murthy, blasting the existing governance standards at Infosys, and fondly remembering the practices when he was at the helm of affairs.

Turning to another page in ET today, we saw another headline where Infosys CEO Vishal Sikka, telling his staff to " Ignore all speculation about governance." Then next to it, is yet another headline wherein the third largest institutional investor in Infosys, Oppenheimer Funds, openly backing Sikka, and has advising the non-executive founders that they need to come to grips with the reality that this is a public listed company, and no longer their firm.

Well, to begin with, before zeroing in on CEO Vishal Sikka, it is reasonable to expect that an organization like Infosys, which is a benchmark by itself in the IT sector, and highly respected internationally as well, had its procedures and standards to select a CEO well laid out and followed.

The board of directors too had their responsibilities well laid out and followed to ensure that the legacy of Infosys, which had been so painfully established over the past two decades had to be further strengthened, especially in face of the emerging challenges confronting the industry as a whole.

If there have been questionable practices with regard to compensation such as the 100% variable component in severance pay, as claimed by Shri Murthy, then was this not addressed by him with the board of directors and CEO Sikka?

Without doubting the convictions of Shri Murthy on such sensitive issues, if the board of directors and CEO Sikka who are now running the show, have their strong convictions behind the same,then whose opinion should prevail? Certainly, those who are running he show.

But, if there is a genuine cause for concern at the existing culture at Infosys, then who is to take a call? Assuming that there is a commonality of interests between the current board of directors, CEO Sikka, and the founders who are now relegated to non-executive roles, is it unreasonable to expect that all they need to do is to come together to brainstorm the ideas, and arrive at a consensus on the future course of action, that best serves the brand image of Infosys?

Today's edition of Economic Times, has alerted us to a fact that the real challenge to 'Make in India' initiative, lies at the boardrooms of such iconic organizations like Tata group and Infosys.