Bengaluru: A little over 72 hours after Vishal Sikka quit as chief executive officer (CEO) of Infosys Ltd, India’s second largest software services firm is yet to officially start the process of finding a successor, amid a broader tussle between the company’s board and its founders that has spooked investors and wiped out thousands of crores in market value.
Although Infosys elevated chief operating officer U.B. Pravin Rao as interim CEO to lead the company till Sikka’s successor is found or at least until March 2018, the company runs the risk of facing the ire of proxy advisory firms and large investors if the search turns out to be a long-drawn-out affair.
Representatives from at least three global executive search firms—Egon Zehnder, Heidrick and Struggles International and Korn/Ferry International—have reached out to Infosys’s co-chairman Ravi Venkatesan, according to two executives familiar with the development. Venkatesan has asked them to wait for now.
The likelihood of Infosys’s next CEO being an insider is currently stronger than the company picking another complete outsider like Sikka, according to a third person, who is a board member.
Emails to Egon Zehnder, Heidrick and Struggles and Korn/Ferry International seeking comment remained unanswered.
“Nobody likes to have this uncertainty on a new CEO and it gets only more embarrassing that even a mandate to appoint a search firm has not been issued," said the head of a large institutional investor, which holds about 2% shares in Infosys. This person asked not to be identified.
During Infosys’s last CEO search, prior to Sikka’s appointment in August 2014, Egon Zehnder was mandated to prepare a list of potential external candidates, while Development Dimensions International was tasked with screening internal candidates.
On Friday, Venkatesan conceded in a call with analysts that the search for a CEO would not be easy.
“On the plus side, we have Infosys brand… we have the momentum. We have a good team. Also, this event has brought together the board in a cohesive way, and any future CEO will possibly draw courage from this… (But) the founder issue has to be put to an end."
Infosys did not immediately respond an email seeking comment.
The board has started discussions with Infosys co-founder Nandan Nilekani to help defuse the situation and help put an end to the latest war that broke out last week after Infosys blamed founder N.R. Narayana Murthy’s “continuous assault and misguided campaign" as the primary reason for Sikka’s exit.
Nilekani is understood to have met Venkatesan on Monday afternoon. He did not respond to an email seeking comment.
Till now, large shareholders have not been asked by either side to mediate. Meanwhile, some investors have cut their holdings in Infosys. Foreign investors, who held about 41% of the firm’s equity at the end of October, now hold about 37%.
“I plan to speak to Mr Murthy during this week to see how we investors can help settle this," said the head of a domestic institutional investor, which holds more than 1% share in Infosys. This person, too, asked not to be identified.
“The board is taking time probably as it decides whether it wants an internal or external candidate as the next CEO. If the company wants an internal candidate, then they won’t require an external search firm," said Shriram Subramanian, founder and managing director of proxy firm InGovern Research. “This probably explains the delay. But let us hope the board is able to come to a decision soon."