Article: Will Vishal Sikka’s resignation pay off for Infosys, in the long run?


Will Vishal Sikka’s resignation pay off for Infosys, in the long run?

Will Sikka's decision to step away from Infosys's titular role help the company, in the long run? What do you think?
Will Vishal Sikka’s resignation pay off for Infosys, in the long run?

By now, you would have definitely read or heard about Vishal Sikka’s resignation from the role of Infosys CEO, and the appointment of U B Navin Rao in the interim. As reported by People Matters, he would still continue to work as the Executive Vice-Chairman of the software major.

Let us explore the circumstances and reasons that have led him to make this decision. 

Constant criticism from close quarters

Co-founder Narayana Murthy has been openly critical of the governance at Infosys for some time now. However, in his latest email to some of the advisors, Murthy raised concerns about Sikka’s abilities as a CEO. 

All that I hear from at least three independent directors, including Mr Ravi Venkatesan (co-chairman), are complaints about Dr Sikka. They have told me umpteen times that Dr Sikka is not a CEO material but CTO material”, the email read. Such a scathing review of his performance is bound to have played a part in Sikka’s decision. 

In fact, the Infosys board cited Murthy’s “continuous assault” as the primary reason for Sikka’s resignation, “despite strong Board support”.    

There was a lot of discussion around Sikka’s salary, with many conjecturing that it was too high, especially in times when the company had to forego any salary increment for a considerable percentage of their employees. The fact that he would be drawing a salary of $1 in his new role, clearly indicates that this would have been a point of discussion and introspection, for Sikka and the board members too.

In his resignation letter, Dr. Sikka referred to distractions and disruptions, which were increasingly becoming personal for him and the team. The following extract from the letter, captures his apprehensions succinctly:-

“Over the last many months and quarters, we have all been besieged by false, baseless, malicious and increasingly personal attacks. Allegations that have been repeatedly proven false and baseless by multiple, independent investigations. But despite this, the attacks continue, and worse still, amplified by the very people from whom we all expected the most steadfast support in this great transformation. This continuous drumbeat of distractions and negativity over the last several months/quarters, inhibits our ability to make positive change and stay focused on value creation.”

Sikka’s impact, before and after his resignation

During Dr. Sikka’s tenure as CEO, Infosys revenues grew from $2.13 billion in the first quarter of 2015, to $2.65 billion in Q1 of 2017. Under his leadership, employee attrition decreased substantially, and programs like Zero Distance, Design Thinking and Zero Bench were launched, to drive large scale innovation and entrepreneurship. 

After the announcement of Sikka’s resignation, Infosys lost around Rs. 29,000 crores in market capital, recording a 10 percent fall in the company’s stocks; the largest over 4 years. While U B Pravin Rao has been named as the interim MD and CEO of the company, the final CEO will only be decided by March 2018.

Will Sikka’s decision to step away from the titular role help Infosys, in the long run?  What do you think? 

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Topics: Leadership, C-Suite

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