Infosys has had a string of misses last few quarters and again disappointed on Friday with Q2 results barely in-line with street expectations and a deeper cut in full year EPS guidance. But even as the street was crunching the numbers, it sprang a surprise by announcing that V Balakrishnan, its CFO, would be giving up his post from Oct 31.
Infosys, India's leading software services provider, has had a string of misses in the last few quarters and again disappointed on Friday with second quarter results barely in-line with street expectations and a deeper cut in full year earnings per share guidance.
But even as the the street was crunching the numbers, the Bangalore-based company sprang a surprise by announcing that V Balakrishnan, its CFO for last six years, would be giving up his post from Oct 31.
Rajiv Bansal, currently VP - Finance, who the company says is very well groomed under Balakrishnan, will now be the head of finance from November.
While Bala (as he is called) will stay on the company's board, he will be responsible for three businesses -- Infosys BPO (business process outsourcing), Finacle (banking software product) and India Business Unit.
Bala has been considered as one of the contenders for the top job at Infosys in future, especially since the shock exits of K Dinesh, who was a co-founder of the company and Mohandas Pai, director HR, last year.
So while Bala has been grooming his successor to head the finance department, is the company grooming him for the CEO's job?
"Bala is one of the finest CFO in the country. He has led his team in setting new standards in financial reporting, corporate governance and compliance. A top performer, he successfully managed a high quality financial model, which has withstood the pressure of the current economic downturn. Given his belief that younger people should get strategic opportunities to shape this company, he has voluntarily given up his CFO position and instead chosen to focus on Infosys BPO, Finacle and the India Business Unit," Kris Gopalakrishnan, executive co-chairman points out.
Gopalakrishnan adds that Rajiv Bansal, the CFO designate, has been a "very bright star" in the finance department. Bansal has been with Infosys for 13 years and has been heading the finance function with Bala for last four years.
But there are also Bala's critics in the market, who say, he has been slow in opening the purse strings to buy companies, despite Infosys having over USD 4 billion in cash and cash equivalents.
Shibulal insists that the businesses that Balakrishnan is going to are a strategic part for Infosys.
"If you look at BPO, it is growing much faster than Infosys average. If you look at India, we have entered India only in the last 4-5 years and we are seeing very good traction, very different kind of business. The kind of business, which we do in India is very system integration oriented. Lot of government work, which he has been doing extremely well, and Finacle is very much in line with 3.0 strategy. The 3.0 strategy is all about increasing products and platform space. So the portfolio, which Balakrishnan is handling, is very strategic for Infosys," he told CNBC-TV18.
Analysts too agree that Bala will now get a much wider and stronger role within the company. He will now be overseeing 30% of the company's business and all the businesses that he will be heading are expected to grow at a faster clip.
But Bala is not the only contender for the top job. BG Srinivas who is also a board member and is the head of Infy's Europe business and global head of financial services and insurance vertical is another person who some feel will get the top job in the next management shuffle. Ashok Vemuri, who is the head of Americas and global head of manufacturing and engineering services, is another candidate who could one day get the top job.
Shibulal himself has mentioned Bala, Vemuri and Srinivas in an interview with CNBC-TV8 in September, when asked about his likely successor in 2015.
Who will finally get the job is anybody's guess. The decision will be ultimately taken by the nomination committee. But one thing is clear that the person, who next becomes the CEO, will be the first non-founder to take up the job in Infosys' history.
Infosys has always been driven by founders, starting with NR Narayana Murthy. Shibulal took over as CEO from Gopalakrishnan last year and will be the last of the founding members in the driver's seat.