Who are the new helmsmen at the top at India's most respected firm
For those watching changes at Infosys, the feted Bangalore software
services company, a story from 31 years ago will throw light on the DNA
of the team taking over at the firm's helm.
For those watching changes at Infosys, the feted Bangalore software services company, a story from 31 years ago will throw light on the DNA of the team taking over at the firm's helm. In a bout of temper while still an employee at Pune software services firm Patni Computer Systems, N.R. Narayana Murthy tells a junior colleague he should not leave office until he finishes a complex task assigned to him. Two days later, Murthy and his wife Sudha, on their way back home at 1 a.m. after a late night dinner, swing by the office. Murthy sees someone wearing a lungi, a printed dhoti-like garment worn mostly in south India, working at a computer. The worker is at a distance and has his back to the couple. They ask the security guard, who is new and does not know Murthy, who the late-night worker is. The guard tells him it is an unfortunate guy under a bad boss, who has asked him not to go home until he completes his job. The nightbird, who had clocked over 48 hours in office, was 25-year-old S.D. Shibulal.
More than three decades later, on August 21 this year, that not-so-articulate geek, gadgets aficionado and technology sage, all rolled into one, took over as CEO and Managing Director at Infosys, which clocked $6.04 billion in revenues last year - nearly double Tripura's domestic product.
New look board takes charge at Infosys
In taking executive charge at Infosys, Shibulal, who still keeps long hours, is stepping into what are clearly big shoes. All the previous occupants of the Infosys corner office at its 81-acre campus in Electronic City, Bangalore, have been larger-than-life personas - partly because of the company's media savvy ways and the absence of too many other examples of exemplary corporate governance in India. CEOs of the past have been Murthy, among India's most visible businessmen; Nandan M. Nilekani, now a Cabinet minister-ranked government functionary; and Senapathy 'Kris' Gopalakrishnan, who doubled Infosys revenues in four years marked by the worst recession since the 1930s in its biggest markets. Not just that. The $800-billion global market for tech services is in a state of extreme churn as the world's leading corporations see the ground below their feet giving way, with their home markets freezing over, and feel pressured to change business models in response to emerging markets. All this when Infosys's mojo itself is wearing off and rivals such as Tata Consultancy Services, or TCS, and Cognizant Technology Solutions grow revenues at a pace faster than before.
Then, if Murthy's advice, "Shibu, please take decisions, do not hesitate", to the 56-year-old CEO sounds like it has a ring of foreboding to it, it is time for a long look at the people, most unfamiliar to shareholders, now at the top at Infosys. Some of these relatively unknown directors include Shibulal; Chief Financial Officer V. Balakrishnan ; Ashok Vemuri, who heads financial services and America businesses; and B.G. Srinivas, running all manufacturing, and Europe operations.
MUST WATCH: Balakrishnan talks about how acquisition is not the sole goal of Infosys
Like a Swiss watch
One of the many reasons why Infosys is a darling of the stock markets - it is valued at $36 billion currently - is the predictability of how it sets its business targets and delivers profits. Almost as predictable has been how the founders, barring one (K. Dinesh, a quality expert), have got a shot at the CEO position even if they are in control of just 16 per cent of company's outstanding shares today. In fact, one of the founders said in an off-therecord conversation some years ago how it was clear "among the founders that they would look after one another". To that extent, Shibulal taking over as CEO was expected but little is known of the managerial style of the man whose early years were spent in south Kerala.
For colleagues, Shibu means both a disciplinarian and a taskmaster who gently but firmly gets jobs done. He not only marks important tasks assigned to others on his calendar, but has a very effective, even if irritating, habit of following up until the job is done. In his early days at Infosys, Shibulal was quite forgetful and was known to forget the first couple of important tasks Murthy assigned him. He remembers it was Murthy who helped him overcome this failing by gifting him a diary "when I could not afford one'', and asking him to put down in it tasks he was supposed to handle.
An ex-colleague finds it difficult to think of Shibulal not in track of deliverables. "He was the first among the founders to have full-fledged office staff; even before Murthy. And, his office [staff] is still entirely with him, including his driver," says this person, requesting anonymity. Srinivas, who runs a $1 billion business for Infosys serving manufacturing clients, says at Infosys, "all processes and systems in operations, [setting] profits of projects, systems to build quality... all have been decided by Shibu. He is passionate about it and so drives it". In other words, a very operations-strong CEO.
Shibulal, together with Gopalakrishnan, is credited with readying the vision and the plan for what the company calls Infosys Version 3.0, an ambitious plan to transform the company like never before. Ambitious, because a crucial target in the transition, says CFO Balakrishnan, is to have a third of Infosys's revenues coming from products and so-called platforms, up from the current eight per cent. To date, the company has just one product, in banking software Finacle, which can claim success with some $300 million in annual revenues.
SPECIAL: Infosys' three founders remain at helm despite Kamath appointment
The new CEO is clear that Version 3.0 will not be rendered overnight. "Look at Infosys in the past," says Shibulal. "Our global delivery model took six to seven years to get there. Infosys 2.0, where we brought down application, development and maintenance from 90 per cent to 30 per cent of our revenues lasted about 11 years." He points to the R&D lineage of the company, saying it has filed for 400 patents in the last three years after not filing for any in the previous 27.
Helping Shibulal make the transition is Balakrishnan, who not many people know was Infosys's first chartered accountant when he joined the company in 1991. Among the early wave of migrants from Chennai to Bangalore in search of a career in accounting, Balakrishnan's first job was at Amco Batteries. His mother did not like it when Balakrishnan decided to move to the little-known Infosys. The word, software, was not yet magical. "I joined this company as a rookie and most of my learnings to complete me as a professional happened here," says Balakrishnan, who played an important role in the company's IPO in 1993, and helped build up some $4 billion in reserves.
Number Theorist
Gopalakrishnan, now Co-Chairman, points to how an idea by Balakrishnan to capture a new set of investors for Infosys in Japan in a 2002/03 secondary offering yielded rich results. "It was because of his strategic thinking and understanding. We allotted 20 per cent of the stock to Japan, actually we could have allotted 100 per cent. The demand was so much in Japan," says Gopalakrishnan.
Company insiders say Balakrishnan's approach is very different from former boss and CFO T.V. Mohandas Pai's in-your-face style. It is more quiet and calm. The 20 years at the company have welded Balakrishnan firmly to the founders' way of thinking. The Infosys philosophy of focusing on profit margins even if it means foregoing revenues, for instance, is the reason industry executives and analysts believe, its rivals TCS and Cognizant are steaming ahead on revenue expansion. "A different lens is surely required at Infosys. But my gut feeling is that Bala would agree to compromise on what he has always believed in, what has been ingrained in him, only to a small extent," says the unnamed ex-Infosys employee quoted earlier. In his defence, Balakrishnan says with a chuckle that is his trademark at investor roadshows and analyst presentations: "Expectation from us is very high. We are like Sachin Tendulkar. Even if we hit 100, people demand 200."
When asked if new Chairman K.V. Kamath's aggressive focus on growth, which he exemplified at ICICI Bank, whose assets he grew 3.5 times in seven years to Rs 3.79 trillion (1 trillion equals 100,000 crore), will rub off on Infosys, Balakrishnan turns more serious. "Certain things will not change," he insists. "Kamath is Chairman of the board, he is not going to run this company. Shibu and Kris will run the company. Kamath will look after board structure, corporate governance, succession planning, etc. We will absorb Kamath's inputs." This is the predominant view among the 13 members of Infosys's executive council, which functions one level below the board of directors and has a big say in important decisions.
Team-A, again?
Part of the reason for Infosys's success in the last three decades has been the different roles its team members played. Murthy and N.S. Raghavan were the brilliant strategists; Nilekani a furious networker; Phaneesh Murthy, now heading up-and-coming iGate, the star salesman; Gopalakrishnan and Shibulal, the hardcore implementers; Dinesh and Srinath Batni, its quality auditors; Pai and Balakrishnan, astute bean counters; and so on.
At some level, Infosys, say people who have known the company and these people closely, is returning to the team of its heyday, especially with the entry of Vemuri and Srinivas onto the board. "There are now people from the market, from the field on the board. This brings a strong feel for the market and voice of the customer to the board. The last time this happened was with Phaneesh," says a second Infosys executive, who quit a senior position with the company earlier in 2011. This person also did not want to be named.
Vemuri, the man responsible for the $2 billion revenues coming from Infosys's banking and financial services clients, is one of two people the senior Infosys executive is referring to. But being well entrenched in the US market can also be risky when the world's biggest economy struggles after three years of recession and tepid expansion - its growth has been 1.1 per cent in 2008, minus 2.6 per cent the next year and 2.8 per cent in 2010 - and shows no clear signs of getting back on track. A product of St. Stephens College in Delhi and IIM-Ahmedabad, Vemuri is battling pricing pressures and trying to strengthen valueadded service offerings so that overall margins hold. "As long as you stay in the commodity business, the opportunity to increase pricing is very limited. But if you provide value-added business, which our clients are not able to do or find with others, cost is not an issue," says the former Bank of America and Deutsche Bank executive, adding the percentage of value-added business at Infosys has gone up three times in the last two years.
An admirer of Jamie Dimon, who is arguably the only Wall Street CEO to have built two world-scale banks in Citigroup and JPMorgan Chase, where he is the current CEO, and ex-boss Nilekani, Vemuri was mentored initially by Pai and later by Murthy himself. With his mentors now not in the fray - Pai has left the company and Murthy is Chairman Emeritus but does not have an executive role - it is now Vemuri's turn to play his part on the Infy board and match Pai in "matching aggressive thought with action". (See 'Stretch Goal' Vemuri.) It is an important strand in his thinking. "An important role of a manager is to groom juniors and eventually become redundant so that the competent amongst the juniors can take over," Vemuri told BT in an earlier interview in 2008.
Vemuri joined Infosys in 1999, the same year the company recruited Srinivas, or BG to colleagues, from power and automation major ABB. At the time, Infosys's enterprise applications business was just about $3 million, and he took it from there. "BG built the enterprise business practice. We had started in 1997/98 and closed it," says Gopalakrishnan. "He made it a success; it now accounts for $1 billion in revenues."
Srinivas has been an important team member in de-risking the Infosys business: when he moved to Europe, the US made for 85 per cent of its business. From 14 per cent in 2004, he has taken the company's Europe revenues to its peak of 26 per cent three years ago (it is about 22 per cent today) when it crossed the $1 billion milestone. The business that he heads today, serving manufacturing clients, is worth more than $1 billion in revenues.
An out and out Bangalore boy - a product of National College and the University Visveswaraya College of Engineering - Srinivas has moved in and out of his hometown with flexibility. (See Quick Gun BG.) "In Infosys I have been through relocations across continents three times. I moved to the US in 2002, then moved to Bangalore, and a year later to Europe," he says on the phone from his Canary Wharf, London, office. Srinivas says he is lucky to have worked in ABB, which had the celebrated Percy Barnevik as CEO when he served there, and Infosys. "Both the companies have built a work culture that is open, objective and full of trust in employees. No supervisory control. This allows you to experiment and demonstrate commitment," he says.
Industry veterans believe the change in management at the top at Infosys will not have an immediate impact because the new team is full of old faces except for Chairman Kamath. If any big change has to happen, it is likely only after a year when Murthy stops being part of decision-making, predicts the ex-chief executive of a rival firm, requesting anonymity.
The Next CEO
But the current phase, as Gopalakrishnan himself says, is one of big change. "For the first time the company will run without Murthy being involved. And it is the first step towards a future date when no founder will be involved," he says. When that happens, it is reasonably certain that the early nonfounder CEOs will all be from within the company. Having built a solid set up to shape future leaders - a leadership centre at Mysore, a vibrant executive council, a closely guarded list of 50 top executives - Infosys has the depth to do so entirely on merit. "The cultural orientation and the long term perspective that a committed and loyal employee brings is worth more that the possibly short-term and instant results from a relative outsider," says Priya Chetty-Rajagopal, Vice President with global executive search firm Stanton Chase.
Viewed from that prism, it is certain that Vemuri, Srinivas and Balakrishnan are likely to have the first chance to be the next CEO at Infosys when Shibulal steps aside. And as much as it is an open race, there are already wagers being placed in the company. Vemuri runs the biggest business at Infosys and is "an out and out salesman, all aggressive and high energy", says the ex-Infosys worker who knows the three well. Srinivas, this person says, is "very strategic, focuses and prioritises well; and importantly is a people person". Balakrishnan, for now, is seen as an outlier since he has run a function, not a business on his own. This view on the trio resonates in various interviews with people in and around the company.
The outlook for these three new directors - each watched closely by shareholders - of Infosys is best captured by an earthy piece of advice put forward by the former senior Infosys executive: Jo poori layega, woh upar jayega, which roughly translates as: "He who brings in the bread will get the leg-up."
Graphic illustrations by Santosh Kushwaha
More than three decades later, on August 21 this year, that not-so-articulate geek, gadgets aficionado and technology sage, all rolled into one, took over as CEO and Managing Director at Infosys, which clocked $6.04 billion in revenues last year - nearly double Tripura's domestic product.
New look board takes charge at Infosys
In taking executive charge at Infosys, Shibulal, who still keeps long hours, is stepping into what are clearly big shoes. All the previous occupants of the Infosys corner office at its 81-acre campus in Electronic City, Bangalore, have been larger-than-life personas - partly because of the company's media savvy ways and the absence of too many other examples of exemplary corporate governance in India. CEOs of the past have been Murthy, among India's most visible businessmen; Nandan M. Nilekani, now a Cabinet minister-ranked government functionary; and Senapathy 'Kris' Gopalakrishnan, who doubled Infosys revenues in four years marked by the worst recession since the 1930s in its biggest markets. Not just that. The $800-billion global market for tech services is in a state of extreme churn as the world's leading corporations see the ground below their feet giving way, with their home markets freezing over, and feel pressured to change business models in response to emerging markets. All this when Infosys's mojo itself is wearing off and rivals such as Tata Consultancy Services, or TCS, and Cognizant Technology Solutions grow revenues at a pace faster than before.
INTERVIEW K.V.Kamath At 63, Kundapur Vaman Kamath is starting all over again. He shares his views on Infosys with BT's Anand Adhikari. Excerpts: On expectations from him: To say that there is a change at the chair level and, hence, everything would be reset would be wrong. Infosys is a stronger and deeper organisation. The board and the chair would lend their shoulder and act as a wise counsel to the executive management. On governance practices: The Infosys board processes are well set. There are processes that we have in ICICI Group which were set under or at a time when Murthy was on our board. To that extent, there is a commonality at ICICI and Infosys. I don't think there is anything new to be done. On leadership development: The leadership process is well set in the company and we will have to make sure that it endures. The key difference here is that we are also seeing a transition from professional founders to professionals who will lead this company in the future. On doing something like ICICI Group where he promoted young leaders: The leadership slate is quite young at Infosys. The way we have looked at ICICI is probably different. In the case of Infosys, there is no rush... It also gives them (young leaders) fairly long tenures in existing jobs, and then they move up. The best way to ensure continuity is to make sure that we have a strong slate within the company which is tried and tested, and can lead the company. On transition from professional founders to pure professionals: There is no urgency at all. The reason is we have a long time... It is a seminal change. It is a change from professional founders, who still have a very significant stake in the company, to an outside set of professionals, who have to carry forward the legacy and meet the expectations of a wide set of constituents. On his friend N.R. Narayana Murthy: The only common passion we have is leadership development and professional leadership. These are the ones that really kept us aligned. |
Then, if Murthy's advice, "Shibu, please take decisions, do not hesitate", to the 56-year-old CEO sounds like it has a ring of foreboding to it, it is time for a long look at the people, most unfamiliar to shareholders, now at the top at Infosys. Some of these relatively unknown directors include Shibulal; Chief Financial Officer V. Balakrishnan ; Ashok Vemuri, who heads financial services and America businesses; and B.G. Srinivas, running all manufacturing, and Europe operations.
MUST WATCH: Balakrishnan talks about how acquisition is not the sole goal of Infosys
Like a Swiss watch
One of the many reasons why Infosys is a darling of the stock markets - it is valued at $36 billion currently - is the predictability of how it sets its business targets and delivers profits. Almost as predictable has been how the founders, barring one (K. Dinesh, a quality expert), have got a shot at the CEO position even if they are in control of just 16 per cent of company's outstanding shares today. In fact, one of the founders said in an off-therecord conversation some years ago how it was clear "among the founders that they would look after one another". To that extent, Shibulal taking over as CEO was expected but little is known of the managerial style of the man whose early years were spent in south Kerala.
| Name: Sarojini Damodaran Shibulal Designation: CEO & MD Age: 56 Qualification: MSc (Physics), MS (Computer Science) With Infosys since: Inception in 1981 Compensation in 2010/11: Rs 1.08 crore Stake in the company: 2.2% Challenge: To make sure Infosys 3.0 is a success |
An ex-colleague finds it difficult to think of Shibulal not in track of deliverables. "He was the first among the founders to have full-fledged office staff; even before Murthy. And, his office [staff] is still entirely with him, including his driver," says this person, requesting anonymity. Srinivas, who runs a $1 billion business for Infosys serving manufacturing clients, says at Infosys, "all processes and systems in operations, [setting] profits of projects, systems to build quality... all have been decided by Shibu. He is passionate about it and so drives it". In other words, a very operations-strong CEO.
Shibulal, together with Gopalakrishnan, is credited with readying the vision and the plan for what the company calls Infosys Version 3.0, an ambitious plan to transform the company like never before. Ambitious, because a crucial target in the transition, says CFO Balakrishnan, is to have a third of Infosys's revenues coming from products and so-called platforms, up from the current eight per cent. To date, the company has just one product, in banking software Finacle, which can claim success with some $300 million in annual revenues.
SPECIAL: Infosys' three founders remain at helm despite Kamath appointment
The new CEO is clear that Version 3.0 will not be rendered overnight. "Look at Infosys in the past," says Shibulal. "Our global delivery model took six to seven years to get there. Infosys 2.0, where we brought down application, development and maintenance from 90 per cent to 30 per cent of our revenues lasted about 11 years." He points to the R&D lineage of the company, saying it has filed for 400 patents in the last three years after not filing for any in the previous 27.
| Name: Venkatram Balakrishnan Designation: Director & CFO Age: 47 Qualification: BSc, ACA, ACS & AICWA With Infosys since: 1991 Compensation in 2010/11: Rs 2.61 crore Stake in the company: 0.08% Challenge: Saving profits from currency volatility |
Number Theorist
Gopalakrishnan, now Co-Chairman, points to how an idea by Balakrishnan to capture a new set of investors for Infosys in Japan in a 2002/03 secondary offering yielded rich results. "It was because of his strategic thinking and understanding. We allotted 20 per cent of the stock to Japan, actually we could have allotted 100 per cent. The demand was so much in Japan," says Gopalakrishnan.
Company insiders say Balakrishnan's approach is very different from former boss and CFO T.V. Mohandas Pai's in-your-face style. It is more quiet and calm. The 20 years at the company have welded Balakrishnan firmly to the founders' way of thinking. The Infosys philosophy of focusing on profit margins even if it means foregoing revenues, for instance, is the reason industry executives and analysts believe, its rivals TCS and Cognizant are steaming ahead on revenue expansion. "A different lens is surely required at Infosys. But my gut feeling is that Bala would agree to compromise on what he has always believed in, what has been ingrained in him, only to a small extent," says the unnamed ex-Infosys employee quoted earlier. In his defence, Balakrishnan says with a chuckle that is his trademark at investor roadshows and analyst presentations: "Expectation from us is very high. We are like Sachin Tendulkar. Even if we hit 100, people demand 200."
When asked if new Chairman K.V. Kamath's aggressive focus on growth, which he exemplified at ICICI Bank, whose assets he grew 3.5 times in seven years to Rs 3.79 trillion (1 trillion equals 100,000 crore), will rub off on Infosys, Balakrishnan turns more serious. "Certain things will not change," he insists. "Kamath is Chairman of the board, he is not going to run this company. Shibu and Kris will run the company. Kamath will look after board structure, corporate governance, succession planning, etc. We will absorb Kamath's inputs." This is the predominant view among the 13 members of Infosys's executive council, which functions one level below the board of directors and has a big say in important decisions.
Team-A, again?
Part of the reason for Infosys's success in the last three decades has been the different roles its team members played. Murthy and N.S. Raghavan were the brilliant strategists; Nilekani a furious networker; Phaneesh Murthy, now heading up-and-coming iGate, the star salesman; Gopalakrishnan and Shibulal, the hardcore implementers; Dinesh and Srinath Batni, its quality auditors; Pai and Balakrishnan, astute bean counters; and so on.
| Name: Bangalore Gangaiah Srinivas Designation: Director, Head of Europe, and Head, Manufacturing Age: 50 Qualification: BE in Mechanical Engineering With Infosys since: 1999 Compensation in 2010/11: Rs 4.93 crore Stake in the company: 0.01% Challenge: To sustain growth in manufacturing and in Europe |
Vemuri, the man responsible for the $2 billion revenues coming from Infosys's banking and financial services clients, is one of two people the senior Infosys executive is referring to. But being well entrenched in the US market can also be risky when the world's biggest economy struggles after three years of recession and tepid expansion - its growth has been 1.1 per cent in 2008, minus 2.6 per cent the next year and 2.8 per cent in 2010 - and shows no clear signs of getting back on track. A product of St. Stephens College in Delhi and IIM-Ahmedabad, Vemuri is battling pricing pressures and trying to strengthen valueadded service offerings so that overall margins hold. "As long as you stay in the commodity business, the opportunity to increase pricing is very limited. But if you provide value-added business, which our clients are not able to do or find with others, cost is not an issue," says the former Bank of America and Deutsche Bank executive, adding the percentage of value-added business at Infosys has gone up three times in the last two years.
An admirer of Jamie Dimon, who is arguably the only Wall Street CEO to have built two world-scale banks in Citigroup and JPMorgan Chase, where he is the current CEO, and ex-boss Nilekani, Vemuri was mentored initially by Pai and later by Murthy himself. With his mentors now not in the fray - Pai has left the company and Murthy is Chairman Emeritus but does not have an executive role - it is now Vemuri's turn to play his part on the Infy board and match Pai in "matching aggressive thought with action". (See 'Stretch Goal' Vemuri.) It is an important strand in his thinking. "An important role of a manager is to groom juniors and eventually become redundant so that the competent amongst the juniors can take over," Vemuri told BT in an earlier interview in 2008.
| Name: Ashok Vemuri Designation: Director, Head of Americas, and Head, Financial Services & Insurance Age: 43 Qualification: MBA from IIM-A With Infosys since: 1999 Compensation in 2010/11: Rs 5.32 crore Stake in the company: Nil Challenge: Not to drop the ball in fi nancial services |
Srinivas has been an important team member in de-risking the Infosys business: when he moved to Europe, the US made for 85 per cent of its business. From 14 per cent in 2004, he has taken the company's Europe revenues to its peak of 26 per cent three years ago (it is about 22 per cent today) when it crossed the $1 billion milestone. The business that he heads today, serving manufacturing clients, is worth more than $1 billion in revenues.
An out and out Bangalore boy - a product of National College and the University Visveswaraya College of Engineering - Srinivas has moved in and out of his hometown with flexibility. (See Quick Gun BG.) "In Infosys I have been through relocations across continents three times. I moved to the US in 2002, then moved to Bangalore, and a year later to Europe," he says on the phone from his Canary Wharf, London, office. Srinivas says he is lucky to have worked in ABB, which had the celebrated Percy Barnevik as CEO when he served there, and Infosys. "Both the companies have built a work culture that is open, objective and full of trust in employees. No supervisory control. This allows you to experiment and demonstrate commitment," he says.
Industry veterans believe the change in management at the top at Infosys will not have an immediate impact because the new team is full of old faces except for Chairman Kamath. If any big change has to happen, it is likely only after a year when Murthy stops being part of decision-making, predicts the ex-chief executive of a rival firm, requesting anonymity.
The Next CEO
But the current phase, as Gopalakrishnan himself says, is one of big change. "For the first time the company will run without Murthy being involved. And it is the first step towards a future date when no founder will be involved," he says. When that happens, it is reasonably certain that the early nonfounder CEOs will all be from within the company. Having built a solid set up to shape future leaders - a leadership centre at Mysore, a vibrant executive council, a closely guarded list of 50 top executives - Infosys has the depth to do so entirely on merit. "The cultural orientation and the long term perspective that a committed and loyal employee brings is worth more that the possibly short-term and instant results from a relative outsider," says Priya Chetty-Rajagopal, Vice President with global executive search firm Stanton Chase.
The outlook for these three new directors - each watched closely by shareholders - of Infosys is best captured by an earthy piece of advice put forward by the former senior Infosys executive: Jo poori layega, woh upar jayega, which roughly translates as: "He who brings in the bread will get the leg-up."
Graphic illustrations by Santosh Kushwaha
