Mumbai: The conflict between ‘ownership and control’ has always been a bone of contention in the corporate world and the Vishal Sikka – Infosys story is no different. The resignation of Vishal Sikka, MD and CEO of Infosys due to differences with founder Narayana Murthy draws parallel to the Ratan Tata and Cyrus Mistry story. Both founders had stepped down and their CEO’s were handpicked by their founders. Both CEO’s were appreciated for their work by the Board of Directors. Yet despite this the CEO’s had to deal with problems of interference by the founders in the working of their respective companies.
During his short tenure of 3 years as CEO, Sikka has been credited for increasing Infosys’s revenues and liquid assets by almost 25% and also for the company’s artificial intelligence platform ‘Nia’. Trouble started brewing for Sikka because of a ‘drop’ in governance standards, his own pay hike and also the huge severance payout made by the company to Rajiv Bansal, former CFO of the company. Even stock markets felt the shock and the Infosys stock tanked by almost 10% to close at Rs 922 in the afternoon, with a loss in market capitalization to the tune of Rs 25000 crores! This was because his resignation came a day ahead of a company board meeting, which was supposed to consider a share buyback proposal.
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The Infosys stock was riding a wave, on the anticipation that the share buyback of the company would be as high as 18%. However Vishal Sikka may not be pushed around like Cyrus Mistry. This is because in case of Infosys the founders do not enjoy the power that Tata had. The Infosys founders hold a 12.75% stake in the company while in Tata Sons, Ratan Tata holds 66% stake in the Tata Trusts, the holding company of the Tata group. And so Vishal Sikka will continue as the Executive Vice Chairman and focus on strategic initiatives of the company, with U.B. Pravin Rao taking his place for now.
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The resignation has also come at a crucial time for the IT industry with the US, their major client cracking down on H1B work visas for their employees. Asia’s no. 2 software exporter and one of India’s most respected companies indeed has a rough road ahead…