Plunging share prices. Shrinking growth. Sexual harassment charges. Kris Gopalakrishnan, N R Narayana Murthy and Nandan Nilekani have faced numerous challenges - and always come out on top.
"The more things change, the more they remain the same" says N R Narayana Murthy, chairman and chief mentor, Infosys borrowing a quote from French critic, journalist and novelist, Jean-Baptiste Alphonse Karr. Murthy is summing up Infosys's journey over the last 26 years - from a start-up in a tiny apartment in Pune to the $4 bn global company that it has become today.
Murthy is right in at least one respect. Every new CEO of Infosys has to go through a baptism by fire. As the first, Murthy braved tremendous odds to start an IT service company in India without any venture capital and with just Rs 10,000 in equity. In 2002, barely a few months after Nandan Nilekani, co-chairman became the next CEO, Infosys faced its biggest crisis - its Head of Ssales, Phaneesh Murthy resigned , following charges of sexual harassment. The same year, on the back of a global slowdown in the IT spending, Infosys saw its growth shrinking for the first time.
Things looked great when Nilekani handed over charge to co-founder S 'Kris' Gopalakrishnan in June. Business was growing by 30% and it looked like Gopalakrishnan would have an easy time running the company. But six months later, the new CEO faces one of the biggest crises of the outsourcing industry. Although Infosys' revenue growth remains strong, the Indian rupee has appreciated 12% in the last one year, putting margins under serious pressure. Once the darling of the Indian stock markets, the Infosys stock has steadily slipped in the last twelve months, at a time when the Sensex is zooming.
All eyes are now on Gopalakrishnan to see how he handles this latest crisis. The Infosys board, its 70,000 employees and investors are keenly watching the new CEO to see if he can protect margins by replacing low-end services work with high-end solutions. Analysts are watching to see if he will deploy the huge cash reserves that the company is sitting on to make an acquisition. Gopalakrishnan will also have to shore up the leadership pipeline to find new leaders who can take over from the current leaders once they begin to hit the company's retirement age of 57.
Comparisons will also be made with his two predecessors, who had extremely successful tenures and a captivating public image. No wonder Gopalakrishnan admits to pressure in running this hugely successful company. In an interview to ET in June, he had said that "Very rarely do people get an opportunity to lead a brand which is so well known and has done extremely well too. There is a lot of expectation, and that puts a lot of pressure on me."
As the first CEO Murthy created a solid foundation - laying down processes and best practices, building a strong culture and establishing Infosys as the most respected and bestknown Indian outsourcing company. When he handed over the reins to Nilekani, Infosys was a solid company with 10,738 employees, $545 mn in revenues and net profit margins of 30%. Despite the rough start Nilekani steadied the ship and oversaw the biggest reorganisation at Infosys.
During his tenure, Infosys diversified into new business lines such as consulting and BPO, opened a subsidiary in China and reorganised itself into independent business units to become more market responsive. Nilekani also played an important role in increasing Infosys' visibility around the world, attending forums like the WEF at Davos and lending his thoughts to Thomas Friedman who turned his phrase, "The World is Flat" into a global best-seller by the same name. By the time he stepped down from the CEO's role, Infosys was a $3 bn company, with 72,241 employees and a CAGR of 41% in his tenure.
No comments:
Post a Comment