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Infosys: Planning for transformation - Views on News from Equitymaster
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Infosys: Planning for transformation
May 5, 2011

An organization should be cultivated in such a fashion that nobody should be indispensable. The show must go on. And Infosys appears to be following this principle. It is planning to put a structure in place, which can give it a self-perpetuating board and management, the way Tatas are running their companies.

Infosys is known for its excellent management capacity which was so far led by the indomitable Mr Narayana Murthy. However, Mr Murthy, Chairman of the Board and Chief Mentor, is going to retire this August. He is the man behind one of India's entrepreneurial success stories.

Infosys has announced some changes to the Board of Directors on April 30, 2011. Mr Murthy has handed over the mantle to Mr KV Kamath who is now the Chairman of the Board. Mr Kamath is the former head of ICICI bank. He is considered to be an expert at managing change. He is well known for his aggressive plans that had led to the growth for ICICI Bank. The current Chief Executive Officer (CEO) Mr KS Gopalakrishnan has been appointed as the Co-Chairman of the Board. (Mr Gopalakrishnan's role has been taken on by Mr SD Shibulal who is currently the Chief Operating Officer of Infosys).

This is not the first time Infosys is gone for multi-layered chairman structure. This structure was there at the time of Mr Nandan Nilekani as well. That structure served well for the company in the past as it brought a mix of approaches to the table.

These changes are interesting for Infosys, which has recently seen its growth lagging that of its peers. To the extent that the company has lost its long standing position as the industry's 'bellwether' to its competitor Tata Consultancy Services (TCS). A major reason for this has been the conservative approach of the management.

The change in management may aim to change this trend. Mr Kamath's aggression for chasing market share and high growth may help the company in securing more orders which would help to drive growth in coming years. However, Mr Gopalakrishnan's steady and conservative approach would balance the ill effects of aggression thus preventing the company from doing anything silly. All in all, we feel that the new management would ring in the new phase of growth for Infosys.

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