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Infosys needs a CEO: CTOs need not apply?

LiveMint logoLiveMint 18-08-2017 Leslie D'Monte

Mumbai: No one can take credit away from the band of merry men who founded Infosys Ltd (then Infosys Technologies Ltd) in 1981. The seven engineers, who had previously worked at Patni Computer Systems Ltd, figure among those who landed India on the global technology map in the 1980s. Chief among them was N.R. Narayana Murthy (a professional then), who was hired by Narendra Patni—one of the pioneers of the Indian IT outsourcing industry and founder of Patni Computer, who died unsung on 3 June, 2014. Patni Computer itself which was acquired by iGate in 2011.

Murthy had studied electrical engineering at the National Institute of Engineering, University of Mysore, and is an MTech from the Indian Institute of Technology (IIT)-Kanpur. Today, he runs Catamaran Ventures. Nandan Nilekani, co-founder of Infosys, has a bachelor’s degree in electrical engineering from IIT-Bombay. He carved a niche for himself when he left Infosys in July 2009 to serve as the chairman of the Unique Identification Authority of India (UIADI) — a cabinet-ranking position that he took up at the invitation of Prime Minister Manmohan Singh. Today, he is a strong votary of Aadhar and the India Stack (a unified software platform to bring India’s population into the digital age).

Kris Gopalakrishnan obtained an M.Sc. (physics) in 1977 and M. Tech. (computer science) in 1979, both from IIT-Madras. Among his other activities, Gopalakrishnan also funds a stem cell-centred multidisciplinary programme on mental diseases and blood disorders. S.D. Shibulal, too, earned his M.Sc. in physics and later obtained an M.S. degree in computer science from Boston University. He is a trustee of the Infosys Science Foundation.

Hence, when Vishal Sikka resigned—as Mint reported that Murthy had claimed in an email to some of his advisers that he had been told by at least three independent directors of the company that he (Sikka) was more chief technology officer (CTO) material than chief executive officer (CEO) material—it begs the question: When does one take a call on who is CTO material and who is made of CEO stuff, especially when hiring for technology companies in a digital world?

To begin with, in today’s digital world, it’s almost impossible for a person with a non-technical background to head any technology company. Most chief executives, and not all our founders, of global technology companies can easily pass off as CTOs rather than CEOs. The names include Mark Zuckberg (Facebook Inc.), Larry Page and Sergey Brin (Alphabhet Inc.), Elon Musk (Space Exploration Technologies Corporation, or SpaceX, and Tesla Inc.), Jerry Yang (Yahoo! Inc.), Jeff Bezos (Amazon.com Inc.), Satya Nadella (Microsoft Corp.) and Sundar Pichai (Google Inc.).

One may recall that John Sculley, who received a bachelor’s degree in architectural design from Brown University and an MBA from the Wharton School of the University of Pennsylvania, was the CEO of Apple Inc. for a decade before being replaced by the co-founder of Apple, Steve Jobs (who had ironically got him in).

It is also true that Eric Schmidt served as CEO of Google from 2001 to 2011. But it is equally true that he was a software engineer, a businessman, and currently is also the executive chairman of Alphabet Inc. And we cannot forget that Schmidt was also CEO and chairman of the board of Novell Inc. (acquired by Micro Focus International Plc. in 2014).

Sikka, who took over from Shibulal as the first non-founder CEO and MD of Infosys from 1 August, 2014, ) to become the company’s first non-founder chief executive, had a Ph.D. in computer science from Stanford University and was former SAP AG global product head.

In 2007, Sikka had been named SAP’s first-ever CTO, and was reporting to then CEO Henning Kagermann. Moreover, in his 12 years at SAP, Sikka led SAP’s product portfolio including the breakthrough in-memory platform, SAP HANA, all their applications, cloud and technology solutions.

So was the Peter principle—the idea that in business, people are promoted into jobs with duties they cannot fulfil—in play at Infosys?

Till 2012, Infosys was the darling of most analysts and the media. It was hailed as the bellwether of the Indian IT industry. When the growth of Infosys was slowing under the leadership of Shibulal, who was then heading the company, there was clamour for the return of Narayana Murthy—-who was Infosys’s CEO from 1981 to 2002. Many expected a quick turnaround when Murthy, then chairman-emeritus, took an active role as additional director and executive chairman of the Infosys board on 1 June, 2013.

That was not to be. There were almost 10 high-profile exits including that of B.G. Srinivas, who was then seen by many as the “probable” CEO. These, coupled with the earlier exits of former chief financial officers (CFOs) Mohandas Pai and V. Balakrishnan—affected the morale of employees, leading to higher attrition rates.

With the appointment of Sikka in 2014, the Infosys management calmed the market, giving a “free” hand to Sikka, assisted by Pravin Rao as chief operating officer.

The former CTO of SAP clearly had his work cut out for him.

Folliwing Sikka’s resignation on Friday, R. Seshasayee, chairman of the Infosys Board, said in a statement: “Vishal has made a seminal contribution to the transformation of Infosys, and he will be remembered for infusing a refreshed sense of direction, purpose and energy in the organization.”

The Infosys management also acknowledged that when “Dr. Sikka took over, the company was lagging behind industry growth. During Dr. Sikka’s tenure as CEO, Infosys revenues have grown from $2.13 billion in Q1FY15 to $2.65 billon this past Q1, with strong margin performance and cash generation, throughout his tenure.” The press statement added that under the leadership of Sikka, “Infosys launched breakthrough new programs to drive innovation, education and entrepreneurship on a large scale.”

The company, the statement said, “launched more than 25 new services which rose to 8.3% of revenue last quarter, from zero in April 2015”.

The Infosys management has also credited Sikka with being “a thought leader and visionary in artificial intelligence technology, recognizing early on the unprecedented value Infosys could deliver through automation and artificial intelligence-led innovation in clients’ businesses”. Under Sikka’s leadership, Infosys developed and launched its artificial intelligence platform Nia (formerly known as ‘Mana’), and already has “more than 160 artificial intelligence scenarios deployed with more than 70 clients”, according to Infosys.

Going by the current Infosys management’s admission, the CTO appears to have done a CEO’s job reasonably well. The question now, as the Infosys stock plunges, is: Who will Infosys project as its “cutting-edge” face in this digital world where companies are increasingly asking for solutions around the internet of things (IoT) and artificial intelligence (AI)?

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