Professional Documents
Culture Documents
CITIES
Kunal Talgeri, Jochelle Mendonca & TV Mahalingam
Will you walk from Bengaluru to Chennai? the pa triarch of a family promoted
business who can't be identi fied asks this writer, while illustrating the difference
between risk and uncertainty. The context -the roles of a chief financial officer (CFO)
and chief executive. Obviously, nobody walks to Chennai unless they must. Yet,
people regularly take on Mount Everest, which is just 8 km, adds the founder, a
self-professed social hermit, with a smile. But you'll say Everest is a more
His point: CEOs are paid to take risks.The risk tenure can be as steep as an
arduous 8 km that we cannot see the summit of, or the 345-km walk to Chennai
that is less expensive. That's the grey zone between uncertainty and risk.
The CEO chooses the risk and so it is the CFO's role--absolutely critical--to hold
the CEO back, ring-fence risk, or call out if it is uncertainty or risk. This is the
When Vishal Sikka was appointed chief executive in mid-2014, the office of the
CEO moved from Bengaluru to Palo Alto, with Sikka working out of both centres.This
unique arrangement is vital to how Infosys is controlled. It is good for clients but for
most of the senior management in India, for the first time in Infosys' history,
decisions taken in the US are having an impact here. More on that later. First, the
known knowns.
One, prima facie events. The CFO of a $8.7-billion company leaves. His exit is
tied to an unheard-of severance package (`17.38 crore), which becomes known five
months after. After the annual general body meeting, where investors express
displeasure, that payment is stopped at a little over `5 crore. This is the most
profits, this CEO is unconventional, to say the least. He has promised Infosys will
grow to $20 billion by 2020; it was sub-$10 billion in 2015-16. It must grow at 20%
Everest.
Now, the good news. Young employees love him. Even technology advisors and
consultants feel that if there is friction between old founders and Infosys, it is a sign
that the company is being reinvented for modern needs. The friction shows there is
serious intent and not lip service, says Sid Pai, an independent technology
consultant, who has never met Sikka. You can expect that the younger company
will align with the new culture at Infosys. What we are seeing (Murthy versus
For most of the 2,00,000 employees that have seen granddaddy-founders move
on, Sikka is a whiff of fresh air. After Nilekani (in 2007), the chief executives were
more about `keeping the lights on', says an employee who has worked there under
all CEOs. We turned very old school. The DNA of the company did not change. The
Sikka, he says. He's been good at translating an idea into performance indicators
their business. He mandates this across all projects across company, the employee
In this context, why are the old at Infosys anxious? It's disclosures, again, and
governance issues. And this plays along with the location factor -Bengaluru.
Long before traffic jams on Hosur Road and Bannerghatta Road, for more than a
quarter century, Bengaluru was the nerve centre for offshore delivery of software
services to clients in North America and Europe. This meant more than 80% of its
workforce, the CEO's office and finance investment functions resided in the ghastly-
Everything was a room or floor away when decisions were taken, or needed
In contrast, Vishal Sikka, 49, sits in a slick Palo Alto. Decisions taken in the US
have ramifications in Bengaluru, with senior employees not having the same room to
push back or alter discussions.Both Murthy and Nandan Nilekani, as CEOs, thrived
because they were able to produce operating margins of 30% as the idea of offshore
delivery expanded globally. Nilekani had flair, Murthy played schoolteacher. Those
Nilekani, markets were hit by the financial meltdown. Pressure on them was to
employees.The strategic goal was to prepare Infosys for a mobile enterprise and
When Sikka arrived, two things were for sure. He was the first technology-CEO
in Infosys' history. All his predecessors had evolved in career from tech geeks to
control.
This also meant Sikka was new to operations, governance and financial
any organisation; neither would it help Sikka connect with the senior managers
offshore.
The Palo Alto resident, who left India in his teens, can't forget a common culture
organisation, but disclosures, accountability and governance become vital when 80%
management because he is based here. But decisions in the past two years have
Pai, the technology consultant, says the transformation is mid-way. Sikka is now
inextricably tied to the fate of the organisation. Any change now would be akin to a
surgeon sewing up and walking away in the middle of a complex medical operation,
about its CEOs, then clients--and hence, even employees--can panic. The
severance package and CEO compensation which was increased to $11 million in
2016. The new salary was effective at the start of this year.
While Sikka has the board's full backing -an acknowledgement that he is re
building Infosys -the senior leadership in India is still used to disclosing the tiniest
lapses. Remember, this is a 35-year-old legacy. The finance and operations teams
project with Infosys was running into technology difficulties when it reported its first
quarter result in April 2016. It was expected to cost far more than the 1.2 billion
RBS has a subsidiary unit, Williams & Glyn (W&G). Due to the complexities of
W&G's customer and product mix, the programme to create a cloned (IT) banking
uncertain, RBS had said in April 2016. This led them to cancel the project with
Three sources said Infosys knew the deal was being cancelled in late June.The
company finally disclosed the deal loss on August 9, about five days after RBS
announced it was scrapping the spinoff of William & Glyn. (It remains unsold.) RBS
make disclosures.
An Infosys top manager concurs that ramp-ups and ramp-downs happen all the
time. Sometimes, we negotiate with them. Only when we are 100% sure that it's
But this is also a matter of perception in Bengaluru, where Infosys took pride in
company, which is the vision, disclosures on projects won't be all that important a
The Palo Alto office can house around 50 Infoscians and showcases proofs of
concept of innovations in development like 3D printing shop, apart from a lab for
virtual reality and augmented reality.These are innovations we are involved in from
the customer's point of view, and a startup environment in the Palo Alto mould, an
his first visits to India, an employee noticed that the CEO had breached an old norm
at Infosys. Employees rarely walk on to the grass of the lush lawns.But Sikka had
An Infosys CEO like none of the four before and that's why he will always attract
scrutiny.
Questions :
1.what according to your analysis is the difference in the style of working between the founders of
Infosys and the present CEO?
2.In the light of present global changes in the business world ,do the strategies adopted by the
present CEO and CFO of Infosys justify ?