Shibulal likely to succeed Kris as Infy head in April

TOP-DECK RESHUFFLE REGULAR PRACTICE

Transition Likely Ahead Of Murthy's Departure

INFOSYS Technologies may ask SD Shibulal, one of its founders, to become the CEO of the company sometime in April this year as part of a regular reshuffle of the top deck, people close to the situation told ET.
    According to at least two people familiar with Infosys' strategy, current CEO S 'Kris' Gopalakrishnan is expected to pass on the baton to COO Shibulal before April this year.
    Infosys started following the practice of changing its CEO regularly in an attempt to give all the founders a shot at running the company. Kris took over from Nandan Nilekani in 2007, who in turn became CEO of Infosys when NR Narayana Murthy stepped down in 2002.
    "We are still debating this… A majority of the board wants the CEO transition to be separated and be done ahead of Murthy's departure," one of the persons said last week. "This will ensure that the transition is smooth and the management has enough bandwidth to deal with Murthy's August departure," he added.
    Murthy, who is currently chief mentor of Infosys, is expected to retire this August.
    At a time demand for outsourcing is gaining momentum, India's top tech firms are preparing to compete more aggressively with global rivals by putting a leaner, simpler leadership structure. Last month, Wipro replaced its joint CEOs with TK Kurien after the company lagged rivals in performance over the past few quarters.
    "This is the make-or-break year for the Indian IT sector. Companies need to push more aggressively and change their existing models—it's just like changing the engines when a plane is in flight," the CEO of one of the top five IT companies said.
WINDS OF CHANGE
INFOSYS STRUCTURE
March 2003 15,356 employees
Geography based structure, competency groups Europe and APAC sales merged into respective delivery units
Sep 2003 19,120 employees
Re-organization by industry and competency group
6 industry vertical units formed Enterprise capability groups, including SETLabs New group for Strategic global outsourcing
Oct 2007 80,501 employees
Complete verticalization across all regions
6 vertical industry business units across regions 5 Horizontal business units embedded within the verticals Focus on emerging geographies. Creation of Executive Council (EC)
Feb 2011
128,000 employees
Possibilities Reduction in the no of verticals Re-alignment in Europe along country lines
Business Transformation Unit to target large deals
Consolidation of
delivery manpower into 2 factories
Source: CLSA Asia-Pacific Markets Company has very capable second rung
    ANOTHER Infosys employee said the company has been holding long discussions with leaders and has even invited senior executives based overseas to Bangalore to inform them about this transition. "There's a definite buzz inside Infosys, and it hints at some restructuring—the CEO transition is among many things being discussed," he added.
    Analysts at brokerage firms such as CLSA forecast a much deeper restructuring at Infosys. "Re-orgs are not new at Infosys, and for a firm eyeing 200,000 in manpower it is sometimes necessary. One more may be round the corner, and perhaps will be worth a keener look," CLSA analysts Bhavtosh Vajpayee and Nimish Joshi wrote in their January 28 report.
    Peers TCS and Cognizant have looked smarter off late, never easy to digest with Infosys, and at least some chances exist that another passing of the baton among the founders is likely, leading to a new CEO," the CLSA analysts wrote.
    When contacted by ET on Tuesday, Gopalakrishnan declined to offer any specific comments on the proposed transition. Nandita Gurjar, Senior Vice-President and Group Head of HR at Infosys, denied there was any rejig underway. "There is no change in verticals and no reorganisation. Why would we do it when we are in growth phase," she said.
    Another senior executive at Infosys said the decision will be a timely one. "This also presents an opportunity to bring a younger leader and some even propose that, but that's likely to happen in 2014," he said, adding, "The executive council is meant to ready the next CEOs and COOs but they may have to wait longer if this happens."
    Murthy and his co-founders—Nilekani, Gopalakrishnan, Shibulal, K Dinesh and SK Arora—have had tremendous success in the past 30 years.
    Setting up the company with money borrowed from their wives, the founders have built Infosys into one of India's biggest corporate success stories and a recognised leader in software and business process outsourcing.
    Their names have also become synonymous with entrepreneurial success. Finding people of the same calibre is always going to be a difficult task, but Infosys has a very capable second rung, developed over the last five years or so to take charge once the founders retire.
    "We are watching the transition at Infosys very closely because many new leaders at the company have started talking about a new, more aggressive Infosys and are even blaming risk-averse stance of some of the founders for slower growth in some quarters," a senior executive at one of Infosys' multinational rivals said on condition of anonymity.
    Analysts say Infosys has too many industries and service lines. "Accenture works with just five industry units, and so can Infosys, in our view. Consulting, ERP and systems integration deserve a union— into what could be a 'business transformation practice'.
    This results from a realisation that while $150-200/hour billed consultants are good to have, there is more scale to be had in the $100-120/hour range of business transformational architects," the CLSA analysts said.