Infosys is a global leader in consulting, technology, outsourcing, and next-generation services. An entrepreneurial adventure that began with seven engineers and the US $250, Infosys is now a publicly traded company with 169000+ relentless innovators and revenues of more than $8.64 billion and hires more than 165000 employees per year.


Mr. Narayana Murthy, and the other founders, never compromised with much higher standards that they established and maintained at Infosys, on any significant issue. None of the founders enriched himself by siphoning money from the company—as is the standard practice among most of the promoters. They were frugal about using company funds for personal expenses or travel. All their wealth came from their shareholding in Infosys; they remain, significant shareholders, even today. Mr. Murthy, in particular, continues to be classified as a promoter, because the board thought that the association boosts Infosys’ brand value. When the founders walked away from management in 2014, they put in place a professional management, under Mr.Vishal Sikka.

Mr. Vishal Sikka, a high-profile CEO, hand-picked by the founders has quit. His exit letter makes insinuations about a ‘founder’—read NR Narayana Murthy—raising too many questions on various issues.

There are divergent views on the performance of Vishal Sikka as well. While he is credited with giving Infosys a different direction, Mr. Murthy has gone public about three Infosys directors sneakily telling him that he was more a CTO (chief technology officer) material than a CEO.  As one founder told a newspaper, “If the board had so much confidence in Vishal, why has it been constantly talking to others, including Mr. Murthy, and complaining about Vishal’s performance as a CEO?”

An Overview


Infosys recently acquired an Israeli automation technology firm in 2015 which had been valued at $162 million at $200 million.

Post the acquisition Mr. Rajeev Bansal, the former chief financial officer (CFO), was paid a massive Rs17.38 crore as exit pay (down from an even higher package of Rs23 crore). According to a whistle-blower, Mr. Bansal had disagreed with the cost of the Panaya acquisition which is at the center of the governance controversy; he resigned a little after. Mr. Murthy, in questioning his big exit payout, had said it seemed like hush money. The board’s reaction was to drastically cut the payment promised to Mr. Bansal. Reneging on a contract is easier said than done; the matter is now under arbitration and one does not know what else will be revealed in the process. Won’t Infosys have to pay what was promised, if Mr. Bansal wins?

Recently, The Mint Newspaper reported that Mr. Narayana Murthy (one of the key founders) asked the board in an email if the company could categorically say that no employee or a relative of an employee benefited from Infosys’s decision to spend $200 million.  He did this after Infosys thought it fit to release just one substantive paragraph from investigations commissioned by four separate agencies since 2015. The report appears to give a comprehensive clean chit to the board and its top management.

The small investors are skeptical with regard to their shareholdings as Vishal Sikka’s resignation has prompted a 9.6 percent fall in the company’s share price wiping away Rs.22500 crore in market capitalization.

Who would have thought that Infosys, which set the gold standard on good corporate governance, would make headlines for poor governance issues?


After Mr.Pravin Rao has been appointed as the new CEO speculation, about Infosys returning to its grandeur has gathered momentum. Hopefully, good sense will prevail and we will see sweeping changes at the Infosys board and a new CEO, without further dirty linen being washed in public.

  Corrective Measures

  1. First, the succession planning of Indian corporates seems to be a serious issue. While the concept of succession planning exists in India, blue-chip corporates have been struggling to successfully put it into practice. Sikka’s abrupt exit puts the company in a state of disarray. The Indian system of succession planning within corporates differs largely from their global counterparts, which begin to hunt for a successor quite a few months in advance.
  2. Transparency is the key to ensuring the highest standards of corporate governance. In the board’s defense, they did call for an independent inquiry into the matter and found no wrongdoing. However, it fell short of releasing the complete reports of the investigation as demanded by Murthy.
  3. A sensible management would have put out detailed excerpts from the report even if it did not want to release the entire report. Instead, the management and directors were arrogant enough to believe that they could ride on the Infosys brand while giving the brush-off to its founder who is a business legend. This shockingly poor judgment alone justifies the demand for significant changes in the board.
  4. The board of directors needed to stay true to the culture of the company that they represent; it is not up to them   to tell a founder, who is asking pertinent questions, to butt out.
  1. Provisions and regulations relating to the role of stakeholders in corporate governance should be incorporated in the Companies Act, 2013 as well as the SEBI Regulations

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