Resurrection of Murthy and Exodus of Balas

Eight high-profile exits in six months yet Infosys story Intact

Bangalore, December 20:  Six months. Eight exits. The resurrection of Narayana Murthy in Infosys might have got a thumb-up from investors, but his return to the helm of affairs at India’s second largest IT company is certainly not going down well with his comrades-in-arms who aspired to fill the void created after the legendary leader’s retirement.

Since Murthy’s return as the executive board chairman in June, Infosys has seen eight high-profile exits — the latest being Infosys director and chief financial officer V. Balakrishnan who was seen by many as an heir apparent to current CEO and managing director S.D. Sibulal.

infosys logoInfosys stated in a release today that Balakrishnan has resigned as a member of the board and from the services of the company (effective December 31, 2013), heaping praises on Balakrishnan, who was also the in-charge of Infosys BPO, Lodestone, Finacle, India business unit and global immigration.

Reacting to the exit, Murthy said, “Bala has been an early adopter and a keen anchor-builder of Infosys. It is difficult to imagine Infosys without Bala’s passion, commitment, and intellect. The Board and every Infoscion thank Bala for his wonderful contribution and wish him great success in his future endeavors.”

Balakrishnan, who recently offloaded about 1lakh shares last month probably hinting at his imminent exit plan, said, “While my heart will always be with Infosys my mind wants to do something beyond Infosys. I thank all my colleagues who supported and encouraged me during my career at Infosys.”

While the company announced induction of U. B. Pravin Rao, who is currently a member of the executive council, senior vice president and global head-retail, as a whole-time director, it recommended the induction of Kiran Mazumdar-Shaw, who is the chairman & MD of Biocon Limited, as an independent member of the board.

Industry experts, however, were of the opinion that Balakrishanan’s exit won’t affect the company.

Ankita Somani, research analyst at Angel Broking said: “Infosys has been witnessing an exodus of its senior-level executives in the past few months. The exits come amidst organizational restructuring that Murthy is overseeing after returning to revive the sagging fortunes of the company in June. We believe that exit of Balakrishnan will not make any material impact at a business level as he was not heading a very big chunk of the company’s revenues. She underlined that the development does indicate that there is a severe management transition happening in the company. Senior level exits remain a concern with the company and we maintain our Neutral rating on the stock.”

Independent advisor A.K. Prabhakar agreed “Narayana Murthy is making the difference in Infosys. After his return, the business is improving and the company’s growth story is gradually coming back on track. I don’t think these people are that important to the company. I think whoever is not performing is being shown the door. He wants the old people to make way for the young blood. Restructuring is a process and, I think, he is doing it in the right way.”

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