Saturday, September 7, 2013

Balakrishnan may be Infosys CEO if Shibulal steps down



 V Balakrishnan, who until three months ago was looking like a fading star at Infosys, has seen his fortunes change so rapidly that he could soon be the CEO of India's second largest software company.

According to people aware of the thinking in the top echelons of Infosys, a confluence of events, including the decision of Americas head Ashok Vemuri to leave Infosys for iGate, make Balakrishnan's ascent to the role of CEO all but certain. "Internally, the sense is that the decision has been made," said a source.
Infosys declined comment on "speculation." A key factor that will influence the timing of Balakrishnan's appointment as CEO is an upcoming personal event in the family of incumbent SD Shibulal, another source said.

If Shibulal decides at the end of November that he wants to step down as the chief executive, Balakrishnan's elevation will be just one step away. Co-founder NR Narayana Murthy was recalled as Infosys chairman in June amid criticism of the company's underperformance, and a perception that Shibulal was ineffective in guiding the $7.4-billion (Rs 50,000 crore) corporation.

The term of Shibulal, one of Infosys' seven co-founders, ends in March 2015 when he turns 60. Murthy, who has said he will need three years to build a "desirable Infosys," is relying heavily on Balakrishnan as he implements his plan to refocus sales and cut costs for better margins.

Murthy made Balakrishnan the chairman of consulting subsidiary Lodestone immediately after taking charge, replacing BG Srinivas, the Europe head who has been regarded by many as a potential successor to Shibulal. Balakrishnan also heads the company's India business, its BPO operations, and the banking software unit Finacle. On Monday, the 48-year-old — he began his career at Lipton and then moved to Amco Batteries — completed 22 years at Infosys.

According to people familiar with the matter, the recent exit of Sudhir Chaturvedi, the North Americas head for banking and financial services, is a pointer to the dimming prospects of Srinivas. Chaturvedi was widely regarded inside Infosys as the right hand man of Srinivas. Equity analysts are divided about Balakrishnan, with whom they have interacted closely between 2006 and 2012 when he was the chief financial officer. They ascribe their apprehension to Balakrishnan's limited exposure to clients as he has been mostly in operations and finance roles so far.

However, Murthy has so far been fine-tuning primarily operational aspects at Infosys rather than formulating or executing long-term strategy. In what could be a major overhaul, Murthy is learnt to be considering an organizational overhaul that could overturn a structure that was put in place only in 2011. Under the new plan being contemplated, only the sales teams will be organized along industry verticals.

Delivery teams, which are now aligned to verticals, will become one large pool from which talent is drawn as the need arises. "There is still a lot of mess to be cleaned up at Infosys and I don't think choosing a CEO will be an immediate priority for Murthy," said a senior equity analyst at a domestic brokerage.

Some experts don't think Infosys has handled leadership succession very well, and cite Murthy's return as evidence of things not having gone as planned. "One wonders why such haste exists in such a strong organization," said Kavil Ramachandran, professor at the Indian School of Business. "Yet another question is the extent of freedom a chief executive officer will have while working under an executive chairman like Murthy."

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