2 min read.Updated: 13 Nov 2019, 11:25 PM ISTLivemint
Infosys has long been an exemplar of good corporate citizenship, and for good reason too. While it contends with the whiff of yet another alleged scandal, let’s not jump to prejudge it
When seven engineers founded Infosys in 1981 with just about $250 as startup capital, they would hardly have expected it to achieve iconic status as a company. But Infosys did. In the process, it didn’t just help galvanize India’s information technology industry, it served as a beacon for Indian entrepreneurship. Its founders went on to become very rich, but did not give up their modest lifestyles. The company acquired an aura for middle-class India. It soon came to represent success by the dint of people’s brilliance and hard work, with integrity and transparency as guiding principles. All this, even as it blazed a trail in various aspects of business, be it its generous sharing of the money being made with employees, or its early adoption of global accounting practices. Its very image has been instrumental in granting it a market edge. By attracting the best software talent, it has been able to offer services across the world at competitive prices. Significantly, its rise has given legions of startups the confidence to harbour global ambitions. Little wonder that its leaders, such as N.R. Narayana Murthy and Nandan Nilekani, have cult followings.
It’s not as if Infosys never had critics. Its strategy for high-end consultancy was once panned as timid, for example, as also its aversion to acquisitions. Some saw its pricing formula as flawed. But few saw any reason not to trust the company—till it was hit by a whistle-blower scandal that led to the exit of a chief executive officer (CEO), its first who was not a member of the founding team. Vishal Sikka, who had come aboard from SAP in 2014 as CEO, departed in 2017 amid a raging controversy over issues of corporate governance. In focus was a $220 million acquisition made in 2015, for which it allegedly overpaid, and an unusually high severance package given to a chief financial officer (CFO) said to be well-acquainted with the deal. The CEO’s high salary had also become a sore point. Just when stability seemed to have returned, Infosys was struck by another set of whistle-blower allegations last month. Sikka’s successor Salil Parekh and the current CFO are alleged to have fudged some numbers to inflate the company’s performance. As before, suspicions have arisen of a top-level failure of corporate governance.
Though the latest charges are still under investigation, many investors and well-wishers seem deeply disappointed by the latest turn of events. Some seem so let down that they are lending an ear to anything that smacks of untrustworthiness at Infosys. Earlier this week, another whistle-blower letter went public. This turned out to be a simple gripe by an employee about the CEO’s travel expenses—which appear rather low by global corporate standards. Even though the world of technology is in flux, a vast sum of shareholder value is at stake, and Infosys’s strategic direction is crucial, not everyone appreciates the role a CEO must play. It is hard to escape the sense that the company is in the throes of a cultural shakeup, with some of its staff seeing every departure from the frugality of past leaders as a violation of core principles. Every company needs to adapt to the market forces it is subject to. Of course, this must strictly be done within the law. If any wrongdoing is established, action needs to be taken. But until then, tarnishing Infosys would be unfair. It deserves a chance to live up to the respect it has earned.