Powered by Founders, Infy Keeps Pros Waiting

Promotions, hikes & decision-making roles likely to follow for GeNext leaders

Infosys may award a number of its geNext leaders promotions, salary hikes and a place in one of the company's key decision-making bodies in a bid to soothe ruffled feathers ahead of a top-level reshuffle involving the CEO and chairman. As Infosys Technologies prepares to appoint SD Shibulal as CEO later this year—the last among the founders to take on the role—the company is scrambling to manage aspirations of its geNext leaders, who will now have to wait longer to get a chance to run India's second-biggest software firm.
According to at least two people familiar with ongoing discussions, Infosys plans to promote members of the executive council, which includes Ashok Vemuri, Subhash B Dhar and BG Srinivas, as presidents of their respective business units. At least one of them may be accommodated on the company's board.
ET spoke with at least half a dozen people inside the company and those tracking Infosys as consultants and experts for this story. When Shibulal takes over, Kris could either become vice-chairman or chairman of the board, two of them said.
The practice of changing its CEO regularly to give all the founders a shot at running the company began when NR Narayana Murthy stepped down in 2002 and Nandan Nilekani took over.
S Gopalakrishnan, popularly known as Kris, took over from Nilekani in 2007. Several Challenges for Infy
While Murthy is stepping down as chairman of the board in August when he turns 65, Kris is set to pass on the baton to Shibulal in the biggest transition Infosys has undergone in its history.
"Infosys never had such a ready pool of leaders during any of CEO transitions earlier—they are much more prepared and hungry," said the first person familiar with the company's strategy. "At one level, there's also an opportunity for Infosys to break the mould and give a shot to one of the geNext leaders, but that's not likely to happen," he added. When contacted by ET, an Infosys spokeswoman declined to comment for this story.
"Amid all this, one needs to ask if the board is following the normal process of identifying either internal and external candidates for the CEO position, or everything is already fixed," said another person who requested anonymity. "We have a leadership bench which is ready, wonder how long they can wait," he added.
Cornell University professor Jeffrey Sean Lehman, an independent director on the Infosys board and chairman of the nominations committee responsible for finding Murthy's successor, did respond to an email asking if the committee is following a process for appointing a new CEO at the company.
TV Mohandas Pai, director-HR, Infosys, said he could not comment on this development specifically, but he believed the company has built a pool of leaders who can run small to medium-sized companies on their own.
"We have over 300 people who are called title holders. Everytime a leadership position opens up or the incumbent player steps down, we invite people who are title holders to apply for that position. A panel interviews them and sends a recommendation to the board committee where two executive directors interview and make a choice. By this process, we have created transparency, openness and the best candidate is chosen. In the event that a candidate is not found from within the company, we hire from outside," said Pai.
Another official familiar with the deliberations confirmed promotions and salary hikes are among the options being considered, but a final decision is yet to be taken. "As of now, all these are mere proposals," he said requesting anonymity.
Managing aspirations of the geNext poses several challenges for Infosys, which is exploring ways to satisfy them. By promoting senior vicepresidents to lead different businesses with over $1 billion in revenues, Infosys is also preparing to create more independent business units, with presidents or 'CEO equivalents' responsible for P&L responsibilities.
"Some internal 'tweaking' could happen later in the year, which is likely to be in line with Infosys' strategic road map for the next three-five years, and should ultimately lead to more autonomy for unit heads. We believe those tweaks could happen after September 2011, after the likely appointment of a new CEO, so that the new structure settles by March 2012 in time for the next fiscal year," BNP Paribas analysts Abhiram Eleswarapu and Avinash Singh said in their report last week.
This is the biggest change Infosys has seen in its history. The company has been gearing up to meet it by putting an executive council in place. The highest decision-making body below the board, the executive council is the grooming place for the next CEO, CFO and COO. Subhash Dhar, member of the executive council, said founders' decision to step down is a great opportunity for professional leaders.
"This company has actually put a timetable of retirement for its founders—this is a strong signal to professionals within the company that they can aspire to go to the top," said Dhar.