While some are raising questions over the company’s ability to regain its position as the sector bellwether, others believe problems at the company may be much bigger than anticipated.
After months of blind faith in Infosys’s revival plan under the leadership of Executive Chairman N R Narayana Murthy, the resignation of Director V Balakrishnan has fuelled doubts, say experts and investors.
While some are raising questions over the company’s ability to regain its position as the sector bellwether, others believe problems at the company may be “much bigger than anticipated”.
Through the past six months, Infosys has witnessed at least one top-level exit every month. Observers had pegged hopes on strong candidates at the company’s tier-II and III levels. However, “exits of core members indicate the internal challenges are more than what we had anticipated”, brokerage house Kotak Institutional Equities has said.
Nervousness was clearly visible on Monday, as the company stock fell, reacting to Balakrishnan’s decision to quit. The decision was announced after market hours on Friday. On Monday, the Infosys stock lost the most among Sensex stocks, ending with a loss of 2.35 per cent. Shares of most of the company’s peers remained range-bound, while the BSE IT index fell just 0.5 per cent.
Before the announcement of Balakrishnan’s exit on Friday, shares of Infosys had ended at an all-time high. Terming the resignation “an exit that would hurt”, Kotak Institutional Equities said the eight top-level exits at Infosys through the past six months would hurt in the medium term.
“The magnitude of exits could create leadership vacuum,” the brokerage said. “While his (Balakrishnan’s) portfolios will be reassigned, what is worrying for us is the inability of the company to retain core talent, even the ones that enjoyed the trust of the board and were considered to be in contention for the role of the CEO... . We believe the impact of the exits could be felt in the medium term.”
It said it was rather surprising Balakrishnan had resigned from the company despite having been assigned multiple new portfolios in recent months. Balakrishnan, earlier chief financial officer for six years, was appointed the head of Finacle, Infosys’s India business unit and BPO in October 2012.
In trouble?
Since N R Narayana Murthy’s return to Infosys, the company has seen many top level exits. The magnitude of exits could create leadership vacuum, say experts.
Some key exits:
- V. Balakrishnan, director
- Ashok Vemuri, head of Americas and global head of manufacturing and engineering services
- Basab Pradhan, global sales head
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