By Shalini Pandey
In a big setback to Infosys, Sandeep Dadlani, Infosys Ltd.’s America head has resigned. The exit comes at a time when Infosys’ Chief Executive Officer (CEO) Vishal Sikka is already drawing flak for not making a difference at Infosys.
The big announcement
Dadlani, who joined Infosys in 2001, put out a note on professional networking site LinkedIn in the wee hours of Friday announcing his exit.
“I will always cherish my 16+ years at Infosys working and learning with some of the best leaders, mentors, colleagues, clients, partners and teams in the industry. I am extremely optimistic of Infosys’ continued success and its strong leadership team. I have decided to pursue my personal interests elsewhere. Next up: An out-of-the-world assignment! Stay tuned,” Dadlani’s LinkedIn note read.
A shocker for the company
Dadlani’s departure would come as a blow to Infosys CEO Vishal Sikka who had recently entrusted him with an additional charge of generating more business from Infosys’ new software solutions, including the artificial intelligence platform Nia.
“Sandeep has played a key role in the success of Infosys over his career and in our transformation journey these past three years. We wish him the best in the journey ahead,” Sikka said in a statement.
Infosys has named two long-standing executives — Karmesh Vaswani as the global head of Retail, CPG and Logistics (RCL) and Nitesh Banga as the global head of manufacturing — to take up the roles of Dadlani.
What landed Infosys in the soup?
Dadlani’s resignation comes at a time when Mr Sikka is struggling to put Infosys back on the growth pedestal.
Infosys, like much of the Indian IT sector, has been hit by slowing demand for its traditional services, protectionist moves in its biggest market, the US, and disruptive technological changes. Further, the IT major is also bustling with an internal row amongst its management and promoters. The promoters, led by NR Narayan Murthy, have questioned the value systems and effectiveness of the current board and management. According to sources, Murthy has expressed concerns as to the company’s ability to achieve the 20 billion USD target by 2020, as set by Sikka.
The founders and investors are fretting over high severance packages to former chief financial officer Rajiv Bansal and chief compliance officer David Kennedy. Concerns have also been raised over high compensation to Sikka and selective board members such as D N Prahlad and Punita Sinha. However, a board member and Biocon chairman Kiran Mazumdar-Shaw has dismissed these issues as already sorted.
Infosys shares fell nearly by 1 percent early June amid reports that the co-founders of the IT major are exploring a sale of their entire 12.75 percent holding in the company which is worth about Rs 28,000 crore. Following the development, the scrip plunged over 3 percent to hit a low of Rs 923.05 on Bombay Stock Exchange. However, it pared losses as the session progressed to finally close the day at Rs 948.65, down by 0.80 percent.
Impact of the high-profile exit
This latest exit of Mr Dadlani at Infosys is important for two reasons. Firstly, it puts a question mark on Sikka’s stint as CEO. Nine executives of the rank of Executive Vice-President (EVP) and above have quit Infosys since he took over as Infosys’ first non-founder CEO in August 2014. Many executives in the past have questioned Sikka’s management style. Last month, Sikka’s former SAP colleague and head of Infosys’ industrial internet business, Gordon Muehl, also resigned.
“Sandeep’s exit is of concern because it suggests that Vishal is finding it difficult to retain his senior management team,” a Mumbai-based analyst said on condition of anonymity.
Secondly, these resignations are despite the fact that Infosys is paying a handsome salary to all its senior executives. Back-to-back senior management exits signify that senior leaders do not have much faith in the company’s corporate governance policies.
Sikka must consider Infosys’ options
Infosys’ shares have risen only marginally, from 56.18% in June 2012 to 62.33% in Feb 2017, since Mr Sikka joined as CEO. Considering this, Infosys cannot afford to lose more of its top officials.
Undoubtedly, Sikka is building an agile organisation, but disclosures, accountability and good governance become vital to building a reputation as far as corporate governance is concerned.
He has to make all efforts to ease out the differences between his board members and co-founders. Corporate governance has to be taken seriously to build confidence among his staff and to lower attrition.
Featured image credits - Visual Hunt
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