Why the Infosys turmoil is likely to continue

The announcement of the choice of a new leader for the company is unlikely before a month or two.

The turmoil at Infosys continues and in the year since N R Narayana Murthy returned at the top, just under a dozen senior executives have left the software giant that was once an exemplar in many ways.

Today, staff morale down the line is low, attrition last year scaled a new high, and even clients have expressed concern at the state of things.

Reflecting this, the company’s stock has fallen from its March peak by over 20 per cent at a time when the overall stock market index Sensex has risen by more than 15 per cent. What is more serious is that the uncertainty and turmoil are likely to continue for some time.

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The announcement of the choice of a new leader is unlikely before a month or two and Mr Murthy has himself said that ‘the company will see some transition in leadership’ and the changes will take into account the best interests of the company.

So a churning that looks quite tumultuous will go on a bit more.

It will be painful while it lasts, and it is being hoped that once it is over the company will forge ahead again under a new leader.

What has added to the volatility is the apparent decision to also look at outsiders for the top job.

This is the right thing to do, or else there would be a serious risk of old ways or thinking persisting (that is happening right now) and leading to risk aversion at a time when precisely the opposite is needed.

Infosys, in particular, needs a bit of shaking up, which an outsider can deliver.

But finding him or her should not take too long. 

Leadership changes in large organisations that do not depend on the sole discretion of a promoter can be quite tumultuous.

Infosys is in a peculiar position in that it is professionally run but has attributes of a promoter-driven organisation.

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Its founders have continued to remain at the helm for long -- too long, in fact -- and the key founder has had to return to steady the ship and chart the course for succession.

So it follows that the board that Mr Murthy left behind was unable to deliver where it really mattered -- that is, bring down the curtains with triumphal fanfare on the founder-promoter-driven period.

What happens in Infosys is important, since India is a global outsourcing leader and this over $100-billion industry should have not one but several leaders.

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There is no reason why Infosys or HCL or upcoming Tech Mahindra should not offer healthy competition to a leader like Tata Consultancy Services.

In fact, the Indian information technology scene is maturing remarkably with start-ups coming into their own, be it in innovative applications or online retail.

Therefore, popular enthusiasm may shift from the biggies to the bright kids.

In this situation, it is important for the biggies to remain agile in pursuing both new technology and processes improvements so that they don’t end up like dull brick-and-mortar industries.