NRN erred in focusing on only founders becoming leaders: Pai

Former Infosys CFO T V Mohandas Pai feels that the present leadership at the Bengaluru-based company is not focussed on creating shareholder value even as he reposed faith in CEO Vishal Sikka's leadership, saying there is "need for a strong chairman".

Pai, who served as a board member of Infosys from 2000 to 2011, also said it was a "mistake" on the part of N R Narayana Murthy to "focus on only founders becoming leaders (CEOs)" which led many people to quit the company.

"I am very saddened. All of us spent a major part of our lives building up this great company, and I am very saddened by what has happened," Pai, who is not a founder but spent 17 years with the company before quitting in 2011, told PTI.

Yesterday, Infosys defended the pay hike to Chief Executive Sikka and the severance package for two former senior executives, saying all decisions were made "in the overall interest of the company", amid reports of simmering differences between the CEO and its founders.

The reports said Infosys founders Murthy, Kris Gopalakrishnan and Nandan Nilekani had written to the board last month expressing their concerns over pay hike to Sikka, and the severance package offered to the two senior executives.

Pai, who served as CFO from 1994 to 2006, said: "The concern is that in the last five years, the focus (of Infosys leadership) has not been there, the leadership that we built up has left for various reasons, new leadership has come in and they are still not focusing on creating shareholder value.

"There is automation coming, which they are trying to face, they have got a good CEO (in Sikka), growth rates have come down, there is uncertainty, shareholders who have put trust in the company have not seen increase in the value in the last five years," Pai added.

He cited three top reasons for "the slide". One is "lack of adequate leadership as many people left because of Murthy's focus on only founders becoming leaders and that was a mistake". Second, "not changing the business model to face automation and change in the marketplace and (the change was) slow because of the leadership flux". Third, he said, was capital allocation and lack of capital efficiency, which are hurting the company.

Further, Pai said he had confidence in CEO Sikka's leadership, but "you need a strong chairman".

Without naming Infosys Chairman R Seshasayee, Pai said: "When you have a strong CEO, you need a strong chairman to balance... so, both can work together. Infosys always had a strong chairman. The chairman holds the company together."

Like Cognizant Technology Solutions, he suggested that Infosys should go in for a share buyback programme. "They (Infosys) should have capital allocation strategy; they are sitting on Rs 40,000 crore of cash. They must use the money for shareholders either through buyback or something else. They are sitting quiet..."

Apart from buyback, Infosys needs to be energised which the CEO is doing, according to Pai. "Communication to the market has to become better. They should improve their communication to the market and shareholders," he advised.

Pai is of the view that in the last one or two years, proper communication is lacking. "Because when you miss your numbers, you cannot go and say you are surprised," he said.

On reports that Murthy, Nilekani and Gopalakrishnan have suggested to the Board to take Pai, along with two others, back as board members, he said: "Nobody has spoken to me. It's something I will not be interested (in). I am not interested."

"That phase of my life is over, and I am doing exciting things, I need to spend more time on what I am doing. I don't want to go back to what I was doing," added Pai, currently Chairman of Manipal Global Education Services and Aarin Capital.