Nandan Nilekani Gets To Cleaning Up The Infosys Mess

What Nandan Nilekani did and said in his first 24 hours on the job at Infosys.

Nandan Nilekani, non-executive chairman of Infosys, addressing his first media conference on August 25. (Source: BloombergQuint)
Nandan Nilekani, non-executive chairman of Infosys, addressing his first media conference on August 25. (Source: BloombergQuint)

“I’m here because I think there’s nobody else. That’s just a joke. It’s a fact also I guess.”

That’s how Nandan Nilekani opened his first Infosys press conference in almost a decade. But the humour faded quickly and Nilekani stuck steadfastly to the script (read press statement) stating that he’s here to stabilise the company and put it back on the growth path.

This week Nilekani returned to Infosys Ltd., a company he co-founded, to help it tide over its second leadership crisis. The first one prompted the return of co-founder NR Narayana Murthy for about a year. But this time Murthy played some part in the drama that led to the resignation of Vishal Sikka, chief executive officer and managing director for three years. So it was Nilekani’s turn to come to the rescue, for what seems like an open-ended term.

There is no time limit on my appointment. I’ll be here as long as necessary to achieve my goals. My goals are to bring in stability and make sure all stakeholders are aligned.
Nandan Nilekani, Non-executive Chairman, Infosys

Evasive Nilekani

Reporters asked several questions about the recent controversies, Murthy’s role in the company, his relationship with Infosys’ newly pruned board and the role of retired co-founders in running the company. But Nilekani refused to get drawn into any finger-pointing, sometimes responding to the queries in a brisk, dismissive fashion.

One reporter pointed out that just a week ago the Infosys board had issued a strongly worded statement against Murthy whereas today the board was singing a peace tune. “Did everything turn “hunky dory” in a week,” the reporter posed. Nilekani shrugged and said “ya”. Nothing more.

Another asked for his views on Sikka’s performance. Nilekani evaded the question by responding, “this is a meeting to convey to you we have a board in place that is motivated, a management that is motivated. We have a plan in place”.

Also Read: Former Infosys CFOs Cheer Return Of Nandan Nilekani But Want Ravi Venkatesan Gone

A reference was made to recent negative comments by two former Infosys chief financial officers regarding the company’s independent director Ravi Venkatesan. Nilekani said he didn’t want to react to “comments on tv” and then made his support for Ravi clear - “As far as I’m concerned Ravi is a valued member of the board. He’s here to help me. And he will be a very strong member as we go on.”

Even an innocuous question on who first approached him to return to Infosys was shrugged off. “That’s best left for a novel or a book in the future,” he responded.

While ending the hostilities, name-calling and accompanying gossip may be necessary for the company to move on, it might seem to some that Nilekani’s refusal to get into the details of what went wrong didn’t quite help achieve closure.

There was one relationship crack that Nilekani attempted to cement over. Reading from the company statement he offered what sounded like a quasi-apology from the board to Murthy.

“The Board believes it to be unfortunate that various differences of opinion have arisen between Mr Murthy and the Board in the recent past. The Board wishes to express that it was not its intention to cause Mr. Murthy or any other affected person any personal distress or anguish while stating its point of view.”

He repeated this when asked about the board’s strongly worded statement issued on August 18 blaming Murthy for Sikka’s resignation.

This may be the board’s attempt to placate Murthy who had said the statement had left him “extremely anguished”.

The Script

Nilekani said in the 24 hours he had been on the job he’d met with the company’s senior management, addressed employees via a video message and begun to engage with other stakeholders, including the media and analysts, to calm nerves.

Our immediate priority is to have stability and make sure management is back to doing what it should which is satisfying customers, transforming the company. In the last 24 hours we have taken a number of steps to reach those goals.
Nandan Nilekani, Non-executive Chairman, Infosys

He detailed four important decisions made by the new Infosys board in its first meeting under his chairmanship on Friday.

1. New Executive Leadership

Nilekani said the Infosys board “has approved the appointment of the executive recruitment firm Egon Zehnder to work with its Nominations and Remunerations Committee to review and identify the right candidate to be the next CEO and MD”.

Ganesh Natarajan, former chairman of Zensar Tecnologies, said he believes that if a new leader is found by the end of the year and business strategy finalised by then Infosys can be back on track.

If there’s once concern I have - what is the role of the board? Is it going to be a very active, active board or is it going to be something that supports a new CEO. To be fair to Nandan we have to wait to see who the new CEO is. If you’re a CEO of a company you’d expect to be given enough headroom and enough leeway to implement the strategy and wouldn’t want somebody, including the committee or the chairman, breathing down your neck.
Ganesh Natarajan, Former Chairman, Zensar Technologies

Sudin Apte, research director and CEO at Offshore Insights – an information technology services advisory firm, expects that Infosys will pick a leader from within the company for the next two years. He expects it to be UB Pravin Rao, currently serving as interim CEO. “I personally feel that’s a good thing because there is no unknown situation then,” Apte said.

2. New Business Strategy

Nilekani said a board committee consisting of Ravi Venkatesan and DN Prahlad will work with the management and take stock of current initiatives and create a consolidated strategy plan that will be presented to the board in October.

It’s been less than 24 hours since I rejoined this company. It’s very premature for me to speak on strategic markets. Which is why I have asked the board committee to work on a report that we can discuss in the October meeting.
Nandan Nilekani, Non-executive Chairman, Infosys

Apte said he initially didn’t have much confidence in Sikka’s strategy but had seen client interest pick up in the last few months. He’s most concerned about the time Infosys will take to decide on a new strategy, if any.

Minimum deviation (from Sikka’s strategy) will be good. But there will be deviation. Most of the time he (Nilekani) said October but a couple of times he also said 6 months. That 3 - 6 months is really a pain because that amount of time will be quite disturbing for the company, people, clients.
Sudin Apte, Research Director and CEO, Offshore Insights

3. Investigation Reports On The Panaya Acquisition

The Infosys board decided on Friday that its new chairman, Nilekani, will “get full briefing on these investigations and the appropriate course of action will be decided,” according to a statement issued by the company.

The Panaya acquisition was among the many grouses Murthy had against the then Infosys board. Based on a whistleblower’s report, Murthy expressed concerns about the acquisition process and the subsequent departure of the company’s chief financial officer Rajeev Bansal and general counsel David Kennedy. Based on Murthy’s demand, the board appointed agencies to investigate the acquisition and the circumstances surrounding it. But despite Murthy’s insistence, the board refused to make the reports public saying the investigations had found no wrongdoing.

On Friday, when asked by a reporter whether he’d make the investigation reports public, Nilekani remained non-committal. When the matter was pressed further he said, “Organisations have to be run by the board and chairman. I want to be able to go through all these things in a very calm and compassionate manner. I think I’ll reserve the right to do so”.

4. New Governance Structure

Over the last few months, the battle between the board and Murthy and other co-founders raised several concerns. Murthy alleged the board was too weak to serve as a check on the executive. Corporate observers have wondered if Infosys is still being driven by its retired co-founders who continue to be shareholders of the company.

The board led by Seshasayee and Venkatesan, if anything was perhaps too magnanimous and professional to continuously placate a particular set of shareholders – which was Narayana Murthy and the rest of them. I cannot recall any case where ex-founders, with such a small shareholding, have had such a disproportionate influence on the final outcome.
Prabal Basu Roy, Corporate Commentator

Nilekani attempted to assuage both sets of concerns. He said the Infosys board will now:

  • engage in further broad-based shareholder consultations to determine what further action, if any, the company can take to ensure that it continues to adhere to high governance standards.
  • the Nominations and Remunerations Committee will deliberate on the long-term governance structure of the board and present its recommendations at the board meeting in October.
As Nandan said, he’s the representative of every shareholder and he should do what is right for all shareholders. It shouldn’t matter to him what the press wants or what one set of shareholders want.
Ganesh Natarajan, Former Chairman, Zensar Technologies

Watch Ganesh Natarajan and Sudin Apte discuss Nilekani’s key priorities, business strategy, new leadership, succession planning and governance issues at Infosys.