For someone who had a dream First Innings, NR Narayana Murthy may find that the playing pitch in the Second Innings may be quite different. Somewhere between the time he bid goodbye to Infosys and now, the leadership of the company he founded dropped the ball just when the game was getting more competitive.
In a difficult operating environment, Infy’s rivals proved to be more nimble and adaptive, forcing the company to lose traction both with customers and investors. Despite having a good strategy to move up the value chain, the leadership failed to execute Infosys 3.0 well. Worse, it also started losing its grip on bread-and-butter businesses like application development and maintenance while chasing margins—a point Murthy himself acknowledges.
Can Murthy rescue Infy from the morass it got itself into? Forbes India asked five close Infy watchers what the company’s challenges were and what Murthy needed to do to turn it around. Here’s what they said. Read on.
Real Transformation or Symbolism?
Will the return of Narayana Murthy solve the challenges Infosys is facing?
By Sudin Apte
CEO & Research Director, Offshore Insights Research and Solutions
Challenged by multiple issues—ranging from employee morale to lacklustre performance—the Infosys board has, finally, resorted to its founder and first CEO/chairman NR Narayana Murthy. On June 1, the board appointed Murthy as the executive chairman.The hopes are high. Everybody—employees, investors, board—expect Murthy to swing the magic wand and turn around the company, that too quickly. Will he succeed? I believe there are four areas where the company faces challenges today. Our analysis shows that Murthy will bring back, almost instantaneously, employee and investor confidence, but getting the company back on a growth trajectory will be a long journey.
The Old New Boss Must Rev up the Sales Engine
Infy needs to reset its margin targets in short run
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(This story appears in the 28 June, 2013 issue of Forbes India. To visit our Archives, click here.)
It\'s a little sad to see that at an age when NRN should have retired and been enjoying a more relaxed pace, he has had to return to a full time job! It shows that top level management capability is really missing in this company. When I see that Shibulal, Gopalakrishnan, and Vemuri are the next level, it\'s not surprising what has happened to Infosys. These are not the people who can lead the company. The second and third level is very weak. It\'s all quite sad, actually. I wish the best for Mr. Murthy.on Jun 29, 2013
this Mr. Vemuri came across as arrogant and smug in the press conference that I saw a few months ago. He seemed like someone you couldn't trust for even a second. It is insulting how he answers questions. If he is a contender for the CEO job, Infy's best days are behind it. Murthy has not displayed good judgement when it comes to identifying good people. I hope the board has exercised good judgement in calling him back. Time will tell but it may be time Infosys does not have.on Jun 29, 2013
For all of NRN\'s talk of simplicity and values take a look at the photo of the boardroom that he\'s standing in. It\'s garish and gaudy. Ostentatious doesn\'t exactly describe it, it\'s hardly tasteful or classy. More becoming for a Vegas casino company\'s boardroom than a IT company. I think this is emblematic of what is wrong with Infosys. They\'ve lost sight of who they are and what they do. You are a backoffice, dull IT company doing behind the scenes work. All the buzz about \"business innovators\", \"big data\", \"technology led business transformation\", etc. is leading you astray. You\'ve \"eaten your own dog food\" as the expression goes and it\'s made you sick! There\'s more bark than bite to this company and market and clients and employees know it. Go back to your roots, Murthy, et. al. and do what you set out to do in the first place, instead of hallucinating about what you\'re not. God bless and godspeed.on Jun 29, 2013
So here's the problem: at one point Infosys had the best margins and the best top line growth. It went to their head, they thought they were truly special and could maintain it forever. They love the 24% net profit margin and don't want to sacrifice it. Tried to move up the value chain with this hocus pocus 3.0. It didn't work. In the mean time, took the eye of the ball on basic execution and doing the boring work of a back office IT company (they think they are consultants, remember. not coders). They became fat and slow (anything that will not get you 24% margins requires multiple levels of approval). In the meantime the competition ran away with the ball. They also promoted arrogant, upstart, highly political individuals (example, Vemuri) and it became a nasty work culture at many levels, not just the top. B level players abounded. That about summarizes it. Then in steps Murthy! What a mess to clean-up!on Jun 28, 2013
I think you hit the nail on the head. Murthy should hire you as a consultant instead of these fancy consultants who\'ve written a lot of nonsense in the article. But you\'ve only diagnosed the problem. I don\'t think you know the treatment (or do you?). For that they need Murthy or perhaps somebody else if Murthy can\'t do it. But it\'s an excellent explanation of what ails this once remarkable company that is now in the doldrums.on Jun 28, 2013
Apte\'s little grid is a lot of mumbo-jumbo that makes little sense. He knows no one will read it much less think about it but it makes him look smart. Good strategy to use the grid, Sudin. Pankaj has some good points. The only one who made any sense in this whole article.on Jun 28, 2013
Why is Mohandas Pai being asked his opinion by the media time and again? He was the CFO, that\'s all. CFO of Infosys is the easiest job there is! It\'s a cash rich company that invests its money in US Treasury bills and other AAA assets. What exactly is there for the CFO to do. He has precious little industry insight and cannot connect with clients at all, much less the employees. He had aspirations of being the CEO (talk about not knowing one\'s limitations!) and when that didn\'t happen left in a huff. It would have been a disaster to have him given him more responsibility. The real challenge at Infosys is that it doesn\'t know what it wants to be: it wants to play with the Accentures of the world but isn\'t able to. In the meantime, it lost it\'s ability to compete for the \"low-end\" application development and support work that helped it grow. Best wishes to Mr. Murthy but it won\'t be easy.on Jun 28, 2013
Wow, awesome comment. I was laughing for a while after seeing this one. Infosys is not only lost ability but also become a downright dishonest company - to its employees, investors and clients. Management is filled with people i wouldnt trust my laundry with let alone my companies IT infrastructure. In truth the accentures of the world are no better but at least they make it look good (by employing managers who are smart enough to hold their own in a discussion/debate). I spent 5 years in Infosys, then I asked myself what is the difference btw my managers and me - the answer was I was lot smarter and actually knew stuff. Then I asked myself what would happen to me if I stayed for another 10 years - scared the shit out of me and walla I quit....on Jul 4, 2013
Of all the so called \"experts\", Pai has an axe to grind because he got sidelined when Shibulal was selected. Pai would have been an even worse choice (if that\'s possible to believe!) and hopefully Infosys has seen the last of him. He may return in some capacity like a bad penny. It is so obvious that Ray Wang has no idea what he\'s talking about and does not understand Infosys or the challenges it is facing. His write-up is a lot of buzz words that consultant throw around and there is zero insight.on Jun 28, 2013
You are spot on about \"Ray\" Wang. He is throwing his words around and hoping they make him sound intelligent and insightful. I don\'t think readers are that dumb (even though his clients might be)! Pai has been making a lot of undignified statements and it is disappointing to see a former Board member speaking publicly in the way he\'s doing. I suspect you\'re right about the \"axe to grind\". He fancied himself as the CEO and it didn\'t happen.on Jun 28, 2013
There is a chorus among readers/analyst that Infosys shall get in to product development. Remember that WITCH has been part of many of the industry leading products like Windows, iTunes, May be Facebookon Jun 24, 2013
Is the \'model\' essentially about doing more of the same?? Fight on the \'margins\'? May be U.S. healthcare is going to offer \'vast\' opportunities next once Obamacare gets into full flow. So, presumably Indian IT firms will \'fight\' for a piece of that pie ... Or some other \'vertical\' or some other \'geography.\' A real lack of imagination, isn\'t it?? I mean, let\'s face it. What are we looking at 10 or 20 and 30 years into the future??? A million employees at Infy? or 2 million? 4 million at TCS? How many men does it take to invent twitter? Are we resigned never to see such innovations coming out of India? What about some \'big\' thinking? Big as in going to Mars or building a passenger aircraft. If India wanted to accomplish something technological and put a million brains (engineers) behind the idea and the effort, India has got the manpower. But may be brainpower is something fundamentally different than mere manpower.on Jun 24, 2013