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Infosys Crisis Reinforces the Leadership Gap


As Circa 2019 winds down, we hark back at the year where corporate controversies seem to have caught the headline like never before. Well! Maybe that’s an exaggeration but the fact remains that we had Rana Kapoor’s exit from Yes Bank, the suicide of V G Siddhartha at Café Coffee Day, the Thomas Cook meltdown, the HDIL and PMC crisis – enough to keep one busy for 10 months.

But wait! Just when we thought the festive season would bring good tidings and help us close out the year on a happy note, here comes a whistle-blower to throw Infosys into a tailspin. And what’s the common thread running through the plethora of corporate chaos? A crisis of leadership.

The relationship between Infosys and whistle-blowers is not new.  In fact, the stories around unethical practices in India are not new. According to a survey by EY, reported in Livemint, fifty-seven per cent of Indian employees reported that senior management is ready to ignore dubious actions by employees to achieve revenue targets.

In the latest episode, which was brought to light by a report in the Hindu BusinessLine, a whistle-blower group which calls itself “ethical employees” has allegedly complained to the US Securities and Exchange Commission and the Infosys Board that CEO Salil Parekh was indulging in “unethical practices” to boost short-term revenues and profits.

Reportedly, the whistle-blower group said it has recordings and mails to show that Infosys was indulging in such practices.

The email to the board and the SEC is dated September 20, 2019, while another email dated October 3, 2019, has been sent to the US Labour Department’s Office of the Whistle-blower Protection Program enclosing “documentary evidence’’ and voice recordings on several allegations made in the earlier email. “We have not sent to the company as our identity would be revealed,” the email to the US Labour Office said.

The complaint alleges that CEO Salil Parekh bypasses reviews and approvals for large deals and directs his key employees to make “assumptions” to show margins. The blames have also been put on the CFO, Nilanjan Roy. The group alleges that several billion-dollar deals in the last few quarters had a nil margin and asked the company to get deal proposals, margins, undisclosed up-front commitments and revenue recognition checked by auditors. The duo had also allegedly pressurized the finance team to show more profits in their treasury management by taking risks and making changes to policies.

With nothing much to respond, Infosys, in a statement, said: “The whistle-blower complaint has been placed before the Audit Committee per the Company’s practice and will be dealt with in accordance with its whistle-blowers policy.”

The investigations are on by a probe committee, set up by the Indian regulator SEBI. However, irrespective of what the findings would be, it is high time to look beyond the right and wrong and rather reflect on the principles and core fundamentals.

The issue has taken place earlier as well, in 2017 and 2018 where whistle-blower had raised doubts over corporate governance issues at Infosys. Hence, now the focus needs to be shifted to choose the better leaders, who are at least ethical and honest.

While we talk about the C-suite, we put the faith in them of taking the organisations to newer successes, and transformation. But such cases could act like faith shaking, both for the investors as well as employees. May be, before thinking of reskilling of the CXOs, a thought should be given to strengthening their leadership and ethical fronts so that core organisation problems could be fought with.

Before we plan to woo the investors and make them invest in our country, we should create seasoned leaders who are capable enough to make good use of the investments.

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