So, after a failed experiment with dynastic succession, Infosys has gone back to being a meritocracy. That's the opposite of what is generally being said, but I'm not trying to make a provocative statement -- it really is true. A dynasty is not just a genetically pre-ordained line of succession. Any pre-determined succession is actually a dynasty. At some point in the remote past, perhaps as far back as when the company was founded, Infosys' founders made a pact that some of them would, one after the other, become CEO of the company. In effect, they set up a dynasty, a line of succession that had nothing to do with merit. In fact, in April 2011, when long-time director and HR head Mohandas Pai left the company it was generally understood that he was protesting against SD Shibulal being made CEO instead of him. Basically, at the level where it arguably mattered most, Infosys' meritocracy was not much more than a public relations posture.
However, this is probably of lasting interest only to corporate historians of Infosys. The more important question is what happens now. There are two parts to Infosys' troubles. One is execution incompetence, which one can expect Mr. Murthy to tackle. The other is the problem of going on trying to be a high-end, high-margin supplier from India in a world which may have no need for such a thing.
The IT services business is in great flux and it's entirely possible that the only large space left for Indian companies is that of being a low-margin supplier of cheap labour. Historically, Infosys has always maintained that it trying to rise above the crude business of being a labour rate arbitrageur but that problem may not be easy to solve. Certainly, TCS, Cognizant and HCL appear to have no great ambitions of solving it.
However, In the hands of a good management team, all problems can prove to be shallow. And therein lies the question that is just not being discussed now -- that of team. Those who have known this company for a long time know that it isn't that it was first run by Murthy, and then by Nandan Nilakeni but that it was run by the two together with a gradually shifting balance of responsibilities. Arguably, the worst thing that happened to Infosys was not that Murthy exited when he did but that Nilakeni exited suddenly, and a full decade before he should have. And for what? For setting up something that has ended up as no more than a computerised ration card system for delivering the UPA's subsidy boondoggles.
I mean no disrespect, but Murthy's demeanour has always been that of a natural-born chairman. It was Nilakeni who was the hands-on operational head of the company from themid 1990s onwards. At this point of time, the company needs both roles to be fulfilled afresh. If Infosys has to regain its mojo again, then it might just need two comebacks, not one.
In any case, the current configuration at the top of the company doesn't look stable. There's Murthy as Executive Chairman and Gopalakrishnan as Co-Chairman. Lurking in the background is also KV Kamath who was non-executive chairman till last week but is now 'Lead Independent Director', whatever that means. And Shibulal is still CEO. It can certainly be argued that neither Gopalakrishnan, nor Shibulal and really nor Kamath have covered themselves with glory over the last two years.
Some ex-Infosys people have told me that in the years past, Murthy had the reputation of having an iron fist in a velvet glove. Perhaps he needs to take that glove off now and clear the confusion at the top of the company. And his former lieutenant should catch the next flight back to Bangalore and lend a hand.