Wake up call

Ever since the IT bellwether Infosys Technologies Ltd (Infy) announced that its head of Human Resources T V Mohandas Pai will soon quit the board and the company to pursue his own plans, the company has been embroiled in a controversy, mostly created by Pai himself. He spoke to several publications and television channels about his departure and in some interviews his observations about Infy’s policies can be considered as very critical of the company’s management. It is unfortunate to see that Infosys, which has not only been a pioneer in setting the highest standards of corporate transparency and financial disclosures for many years and has provided one of the best returns on investors’ money, is in the centre of the media focus for wrong reasons. But there are some fundamental issues. First of all, Pai being one of the top four key executives of the company, is governed by the code of conduct applicable to all senior executives of all listed companies, which is not to express divergent views or criticise policies of the company because such acts can damage the shareholder value and make the clients nervous.

Pai’s observation that Infosys was in danger of losing its growth momentum as competition is overtaking it, may have some merit considering the company’s relative slower growth in margins in the last couple of quarters. While Infy still gets the highest price premium among the IT stocks, Rs 27,501 crore ($6 billion), the company’s 21 per cent annual growth in revenue on a huge base is by no means a small achievement. Yes, the competition is catching up with Infy, but the vastly untapped global IT outsourcing market will continue to offer big growth opportunities to the top five Indian IT companies for many more years.

Though Pai has clearly said that he never had any ambition to grab the top job in the company, his observation that old timers should step aside to make room for a new generation, merits attention. Many believe that like a family run company where the promoter and his close relatives always occupy key positions, the founder promoters at Infy should not have an automatic claim for top positions. Whether an inside talent or an outside professional, the best man should run the company to maximise the value for all stakeholders.

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