Nilekani passes the baton to Kris

Nilekani passes the baton to Kris
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First Published: Sat, Apr 14 2007. 12 55 AM IST
Updated: Sat, Apr 14 2007. 12 55 AM IST
Bangalore: Infosys Technologies Ltd, the company founded by seven engineers in 1981, which has come to represent India’s IT industry, has a new CEO.
Even as it announced a 70% increase in fourth-quarter profit and sparked off a major relief rally in the stock markets, Infosys said that S. ‘Kris’ Gopalakrishnan, its 52-year old chief operating officer and managing director, would replace Nandan M. Nilekani, its high-profile 51-year-old CEO, on 22 June.
Gopalakrishnan is just the third founder to occupy the CEO’s slot in a company that has only had three CEOs since it began as Infosys Consultants Pvt. Ltd in 1981. The other two being Nilekani, who will become co-chairman and N.R. Narayana Murthy, who is non-executive chairman. Murthy retired as executive chairman when he turned 60 in July, in keeping with the company’s rules.
Infosys also said that S.D. Shibulal, a founder and director who is in charge of sales and delivery, would replace Gopalakrishnan as COO. With this, the four top posts at the company, that of non-executive chairman, (executive) co-chairman, CEO and COO are occupied by the founders. One of the other founders, K. Dinesh, 52, is a director with the company. The other two founders, N.S. Raghavan, and Ashok Arora no longer work for Infosys. Arora left in 1989 and Raghavan in 2001.
"It will take another 15 years for Infosys to move away from being promoter heavy," said Harish Bijoor, chief executive of Harish Bijoor Consultants, a marketing consulting firm based in Bangalore.
Nilekani, however, defended the company’s decision. "You cannot say somebody should not take up a role, especially since Kris is in the prime of his career,” he said. “He deserves to be the CEO...." Nilekani also said that the company would stand by its decision not to employ any family members of the founders.
In companies where founder-promoters hold most positions in senior management, there is usually a lot of flux in the level just below. Infosys has faced some problems at this level, which would translate into head of a function or a senior vice-president in its hierarchy; in 2004 and 2005, several key senior executives from this level, including Basab Pradhan, then head of sales, and Hema Ravichandar, then head of human resources, left.
Pradhan runs a small IT-products firm today and Ravichandar is an independent consultant.
Although Infosys’ promoters continue to hold the most important positions, they have continuously diluted their holding in the company, from 28.83% on 31 December 2001, to 16.94% on 31 December 2006.
On Friday, Nilekani and Claude Smajda, a former managing director of the World Economic Forum, member of Infosys’ board, and chairman of the nomination committee, said that the former had decided to move out of day-to-day operations around the time Murthy retired.
“It is possible for somebody in his prime to step down and give way to future leaders," said Nilekani. When he took over in April 2002, the company’s revenues were Rs2,603 crore. Infosys ended 2006-07 with Rs13,893 crore in revenue.
"We actually develop new leaders and give them responsibilities for running different departments, business units. In fact, many of these businesses are larger than Infosys was five years back...," said Gopalakrishnan, implying that there is no glass ceiling at the company.
Nilekani added that “10 years from now or whatever appropriate time”, Infosys could be run by a non-founder “who will be the most meritocratic candidate at that time”.
For the year ended March, Infosys’ revenue grew 45.9% to Rs13,893 crore and its profit, 56.6% to Rs3,850 crore.
raghu.k@livemint.com
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First Published: Sat, Apr 14 2007. 12 55 AM IST
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