It was a dazzling corporate star of the kind India had never seen, blazing to the very top within a mere two decades of its inception. Its governance ideals were stellar. Its founder-leaders were single-minded about delivering results. A virtuoso performance year after year endeared it to stock-market investors. For entry-level engineers, getting a job offer from Infosys was the equivalent of hitting the lottery.
Then came the decline.
The Infosys story started to unravel in recent quarters almost as fast as it had developed. There were many troubling signs, such as missed targets quarter after quarter until the company altogether stopped the practice of giving out quarterly forecasts last year. Revenues slowed and operating profits shrank until, astonishingly, Infosys was underperforming its industry peers. This April, after yet another desultory quarterly results announcement, its stock price fell precipitously to a 10-year low. Fresh campus hires who were given Infosys offer letters a year ago were kept waiting several quarters without joining dates. The company slid to number three in the Indian IT rankings, overtaken by virtual newcomer Cognizant Technologies, a dozen years its industry junior. This year, Infosys expects to grow at a 6-10 per cent rate, lagging behind the industry’s forecast of 12-14 per cent growth rate.
Desperate situations warrant drastic fixes, and on June 1 came the stunning announcement. Its principal founder, billionaire Narayana Murthy, had pulled himself out of retirement and was rushing to its rescue. A full 11 years after he relinquished an executive role in the company, Murthy was back in the saddle as executive chairman, replacing banking legend K V Kamath, who had been appointed non-executive chairman with much fanfare just a couple of years ago. Returning alongside Murthy was his son, Rohan, 30, a computer science PhD with degrees from Cornell and Harvard, as his executive assistant, to make him “more effective”.
In doing so, Infosys was breaking two sacred tenets that Murthy himself had espoused and championed. One, that all its bosses, including founders, would retire from executive roles at 60. And two, that none of the founders’ children would join Infosys. Significantly, the announcement regarding the broken commandments came exactly two weeks prior to the company’s annual shareholders’ meeting on June 15. It was as if the company had finally stepped on the panic button.
Infosys appeared in deep enough trouble to necessitate that Murthy not only breach his own Murthy’s