BENGALURU: In 2017, when Infosys’ first non-founder CEO Vishal Sikka left the organisation, several questions were raised on the succession planning in Indian corporates. One of the co-founders of Infosys, Nandan Nilekani, who led the implementation of the Aadhaar programme, was appointed by the board of directors to lead the company. His return was a kind of dramatic comeback as he was called back to steer the corporation. Nilekani served as the company’s CEO from 2002 to 2007.
After five years, now in 2022, at a time when the company is celebrating its 40 years, its succession planning is still being discussed. Reacting to a question on succession concerns, Infosys co-founder NR Narayana Murthy said he was completely wrong in keeping away the next generation of the promoter group out of the company.
His previous view was to keep family members of co-founders away. In 2014, Murthy decided to leave the company and his son Rohan also left the company after serving as his father’s executive assistant. However, Rohan’s role was only that of the assistant and he had no leadership role. Apart from Rohan, no other promoters’ children have worked at Infosys, as the company’s policy has been to keep family members away from any leadership role.
Murthy said he embraced the idea as he was afraid that some people may bring undeserving candidates and put them in positions. Nilekani said, “I will be handing over to a chairman, at whatever point I exit from the scene, who will be a non-founder. Now, there is no plan B. In case you hand it over to someone and it doesn’t work out, there is no plan B.” Murthy also said that the company has to flourish for at least 100 years.
No paternalistic practices
Peter Bendor- Samuel, CEO of Everest Group, a research firm, disagrees with Murthy’s view. He said bringing in a family to take over would have been a disaster and that his attempt to do that with his son didn’t work out well.“He and other founders created a highly professional firm based on meritocracy, introducing paternalistic practices undermines this,” he told this newspaper.
He argues strongly that Infosys has a strong bench of leaders and several of which could take over. “If you look more broadly to the Infosys diaspora there are many more very capable leaders who could be tapped to return,” he said, adding succession planning is always complicated, and it is always a risk as you move to new leaders. Samuel says that Infosys is better positioned than most global firms.
According to him, Nandan (Nilkeni) is a very special talent and will be hard to replace. “He seems to have reconciled to extending his role at Infosys for a few years. But at the end of the day, everyone can be replaced and if Infosys wants to really take up its role as a global leader there are several strong candidates who could do well in the role some of which are not Indian but even if the Board wanted to keep the Indian roots there are good options,” he said.
While Akshata Murthy holds a 0.93% stake in Infosys, as per the shareholding pattern as of September 2022, Rohan Murty holds 1.45%. Nilekani’s daughter Janhavi has a 0.20% stake in the top IT company. Since Janhavi transferred shares to her son, Tanush Nilekani Chandra now holds 0.08 or 33,56,017 shares. The total promoter holdings stand at 15.16%.
Bench strength
Samuel said the succession of a leading global firm is always risky. “However, Infosys has a strong internal bench which can be groomed and a very strong set of former Infosys executives who now have proven themselves by running other firms which could also be tapped if they want to keep succession to those executives with Infosys experience. There are also candidates outside the Infosys family which would do well,” he said.
The current bench is moving on as there is no immediate prospect of them becoming the CEO as the present CEO Salil Oarekh will continue till March 2027. Apart from Salil, the second largest IT company has other prominent executives including CFO Nilanjan Roy and President Mohit Joshi. As chairman of Edgeverve System, Joshi leads the company’s software business which includes the banking platform Finacle.
Infosys has many other leaders including Anantha Radhakrishnan, who is the CEO and MD of Infosys BPM, the wholly-owned subsidiary of Infosys. This year, Infosys BPM completed two decades and has an employee strength of 50,000. In 2020, Infosys BPM crossed $1 billion in revenues. Aditya Narayan Mishra, MD and CEO of CIEL HR Services said that well-governed companies will have processes and must have enough checks and balances to make sure that nepotism is prevented.
“This is easier said than done. Assuming that the scion of an entrepreneur is interested to work in the company and is seen to be competent by the Board or its representative body, he or she must not be disadvantaged in any way. We must not deny him or her the opportunities to work for the company,” he added.
Murthy had kept family members of co-founders away
Narayana Murthy’s previous view was to keep family members of co-founders away. In 2014, Murthy decided to leave the company and his son Rohan left the company after serving as his father’s executive assistant.