Murthy and co may have driven the final nail into IT’s coffin

Rank 7 | NR Narayana Murthy & family | Company: Infosys | Net Wealth: Rs 16,400 crore | Co-founder of Infosys, NR Narayana Murthy and his family only added 1 percent to their overall wealth this year, becoming one of the ten richest tech billionaires in India.

Shishir AsthanaMoneycontrol Research

For those who could read the tea leaves, it was apparent that Vishal Sikka’s days as CEO of Infosys as were numbered. First came the buyback announcement on the stock exchanges. Sikka was not in favour of announcing a buyback and preferred conserving the cash for the acquisition. The second was a reduction in stake by Oppenheimer Fund, the third largest institutional holder of Infosys. And third was reports in the press of a possible re-induction of Narayana Murthy, one of the founders who was spearheading the attack on Vishal Sikka.

In the letters released to the stock exchanges and interaction with analysts, Infosys’ management made it apparent that the only reason Sikka finally decided to step down was the continuous haranguing by Murthy and his group of promoters.

The fact that Sikka’s exit hasn’t been taken well by shareholders is apparent from the fact that the stock is down nearly 10 percent. No sane investor would like to hitch a ride on a rudderless ship with the old promoters fighting the management on the decks: a sure recipe for disaster.

Sikka’s exit is not only bad for the company but also for India’s information technology sector as a whole. Sikka with his global experience as a leader of SAP came in with new ideas of product development that would have led the sector out from the low-end jobs that most of Indian IT companies lapped up.

Only recently Sikka showcased the indigenous driverless golf cart and proudly tweeted ‘Who says we can’t build transformative technologies’. Sikka’s blog and interactions with analysts highlighted his passion for artificial intelligence and how he intended to create a knowledge-based company out of Infosys. Sikka was leading Infosys out of the traditionally cost-arbitrage model.

In his resignation letter, Sikka has reiterated the point that the proudest moment for him was to unleash the creativity of many grassroots employees. He picked up the innovative strength of his employees in artificial intelligence which helped generate 16,500+ idea, 2,200+ of which have been implemented.

Apart from the focus on artificial intelligence and digitalization, Sikka had plans to grow the company through the consulting route, which is considered to be more scalable and remunerative.

But these changes need time to be put in place, implemented and delivered, something that the old promoters did not have the patience to wait for. Their nagging has cost Infosys one of the brighter minds in the industry.

Look around and you would find almost all IT companies are led by people who have grown with the promoter and where the process is of vital importance rather than the product. There is no one who brings in the international experience of working on the latest and future technologies.

The issue also highlights an Indian promoter’s irrespective of his education background, is reluctant to pass on control. Even though he holds a minority stake, he would still like to steer the company as per his whims and fancies. The result, sadly, is a driverless cart, but not the high-tech sort Sikka was talking about.

Murthy and his coterie may have driven the final nail into the beleaguered IT sector’s coffin.