The similarities are hard to miss. Last October, the 79-year-old Ratan Tata staged a coup to oust his successor Cyrus Mistry, 49, as chairman of the $100 billion conglomerate that bears his family's name. Last week, the 50-year-old Vishal Sikka quit Bangalore-based Infosys Ltd. after constant attacks by founder N.R. Narayana Murthy, 71, who had snagged the younger man as CEO from SAP SE just three years ago.
Infosys shares, intraday -4.6%
It's both easy and wrong, however, to paint the machinations at Infosys as Tata redux. Unlike Ratan Tata, who was in control of the group holding company's board, Murthy -- and the other co-founders, if they side with him -- are just shareholders taking on a hostile board from the outside. That won't work. Either they bulk up their 13 percent ownership share to fight, or they sell out.
He's the co-founder who ran Infosys after Murthy before leaving in 2009 to create India's ambitious and controversial biometric-based unique identification system for citizens. At 62, he isn't too old to recognize the urgency of going digital. Labor-cost arbitrage between India and the U.S. has had a fabulous run, but pricing pressures in the legacy software applications and maintenance business are now intense. Investors seem in no mood to hang around for lollipops like the recently announced $2 billion buyback.
Regardless of whether the founders return or leave, a new CEO must be located. Here again, Ratan Tata was lucky. Natarajan Chandrasekaran was doing a splendid job of running Tata Consultancy Services Ltd. Elevating him as group CEO helped stabilize the floundering ship. Who will Infosys tap?
The more they bicker, the bigger the dent to customer confidence. Tata Consultancy, Cognizant Technology Solutions Corp. and Wipro Ltd. may gain market share, hurting Infosys's chances of hitting its current fiscal year target of 6.5 percent to 8.5 percent sales growth in constant currency terms, according to Bloomberg Intelligence.
Without owning the board, Murthy's fate might resemble Mistry's more than Ratan Tata's. And if the anonymous whistle-blower reappears, the denouement could be even more drawn out than the Tata saga.
(To contact the author of this story: Andy Mukherjee in Hong Kong at amukherjee@bloomberg.net To contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.net)
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