Why B G Srinivas’ Exit Is A Worrying Sign For Infosys

by CXOtoday News Desk    May 29, 2014

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In a surprise move, board member and president of Infosys, B G Srinivas, who was also seen as a strong potential CEO candidate, has resigned from his post. The news comes only a day after Infosys declared it is evaluating its next CEO search by interviewing eight internal candidates including Srinivas. As one of the most able executives, his exit is not only worrisome for the $8-billion bellwether but also brings back the question whether Infosys will continue to bank on its internal candidates.

Read: Infosys Completes Evaluation For Its Next CEO

Infosys lost an able man

While Infosys will have its first external CEO in its 33-years of existence, Srinivas was often seen as the remaining few internal candidates to succeed S D Shibulal who will step down in January 2015.  He served Infosys since 1999, leading its Europe business, the manufacturing and engineering units, and later the financial services and insurance business and was recently elevated as the president of the firm, along with U B Pravin Rao.

Srinivas is the 10th senior executive to have left Infosys since in June last year when NRN Narayan Murthy made a comeback after two years to help revive the sagging fortune of the company. Needless to say in Murthy’s absence resulted in the company’s poor operating margins, which was way lower than rivals such as TCS, Cognizant, Cognizant and HCL Technologies. While Murthy took on a “clean-up” process to restructure the company, the spate of senior level exists were equally painful as the company let go of candidates such as Ashok Vemuri and V Balakrishnan — who were strong CEO contenders along with Srinivas.

Read: 2013 sees major senior level exits in Indian IT

However, with Srinivas’ exit, Infosys had lost a great people’s person, believes industry watchers. The 50-something senior executive was said to be one of the most reticent one, according to the industry. He has also earned a respected position in the investors and analysts circle for his soft spoken nature.

V Balakrishnan himself told TOI in an interview that the company “should now speed up the process and appoint a CEO quickly to quell uncertainties that could have a big impact on the company.”

 Time to go external?

Former Infosys board member T V Mohandas Pai believes that Srinivas’ exit is a big loss to the company and suggests “Infosys should appoint a new CEO at the earliest to end the suspense and to stem the executive exodus.”

While Murthy has also acknowledged that Srinivas had been an integral part of Infosys and had played an important role in the company’s growth, his exit is a worrying sign for the organization. casting a shadow on Infosys’ business operations, with many who were close to clients and who understood the business no longer there.

CLSA analysts recommends that Infosys now needs a fresh approach on leadership planning from what it had adopted in the past, which requires a rethinking of its succession strategy. The report maintained that even though it worked to the company’s advantage in the past, an argument for considering external candidates for leadership positions at Infosys is that change could be more important than continuity especially as things have not been going that well. According to the report, in such a scenario, external candidates would get a much-needed fresh perspective on-board while preventing complacency among existing management.

Infosys maintained that external executive search firm Egon Zehnder is helping Infosys to identify an external slate of candidates, in parallel with internal search. It now needs to be seen whether the company looks outside its internal comfort zone and reaches out for the right candidate.