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Murthy has his task cut out at Infosys

Murthy has his task cut out at Infosys
Highlights

He needs to shake up sales force, culture in order to revive fortunes of the IT giant Infosys has also been losing market share over the last two...

He needs to shake up sales force, culture in order to revive fortunes of the IT giant Infosys has also been losing market share over the last two years. From the year ended March 2011 to the year ended March 2013, Tata Consultancy's share of the overall revenues of the Indian IT sector grew to 10.7 per cent from 9.3 per cent while Infosys's share remained unchanged at 6.9 per cent.
Bangalore (Agencies): Markets cheered N R Narayana Murthy's return to the helm of Infosys Technologies as its Executive Chairman, but his success in changing fortunes of the IT giant that he founded and built so passionately, would depend on his ability to rejuvenate its sales force and shake up the conservative culture he helped create. On Saturday, Infosys surprised many by bringing back the 66-year-old Murthy as Executive Chairman nearly eleven years after he stepped down as its chief executive officer. Murthy, who enjoys larger �than-life image in India and abroad for his contribution to the country's IT sector, is expected to reverse falling market share of the IT major, besides ending two years of disappointing results. Infosys shares rose as much as 9 per cent to almost a two-month high following the weekend announcement, outperforming the broader market. But Murthy, who was the longest serving Infosys CEO, returns to an industry buffeted by change. Customers and rivals are pushing prices down, costs are rising as technologies become obsolete faster than ever, and the sector's biggest market, the United States, is considering visa rules that will make it more costly and difficult to send workers there. Some industry experts say Infosys's inflexibility on prices and margins and a tradition of rotating leadership roles amongst its founders have made it less agile than rivals like Tata Consultancy Services and HCL Technologies. Infosys has also been losing market share over the last two years. From the year ended March 2011 to the year ended March 2013, Tata Consultancy's share of the overall revenues of the Indian IT sector grew to 10.7 per cent from 9.3 per cent while Infosys's share remained unchanged at 6.9 per cent. "They were not an easy company to work with from a contracting and pricing perspective. Changing one person automatically doesn't solve these issues, so really one has to see over the next two to three quarters," said Sudin Apte, CEO of Pune-based outsourcing advisory firm Offshore Insights. Murthy was CEO for 21 years and, as the company's second largest shareholder, has the clout to force change. He is known in the industry as a charismatic leader, which may help retain staff at a time when employee turnover is at its highest in two years. But his return has revived investor concerns that Infosys is overly reliant on its founders for leadership, a management culture criticised as conservative. All four of its CEOs were members of the group that set up the company 32 years ago and external hires rarely occupy senior positions. "Infosys has got a reputation for internal arrogance and you see that in the customer base, you see that in the industry," said Peter Bendor-Samuel, CEO, Everest Group, a Dallas-based consultancy firm. They're going to have to address that and to do that they're going to have to bring talent from the outside. If Murthy chooses to do that, he's uniquely positioned, he added. To bring Murthy back, the board raised the mandatory retirement age and allowed him to bring his 29-year-old son, a Harvard fellow with a PhD in computer science, as executive assistant. Once the Indian IT sector trend-setter, Infosys has churned out a string of disappointing results. Its annual forecast for revenue growth of 6-10 per cent lags behind the 12-14 per cent expected for the industry during the current fiscal. Infosys is also struggling to generate revenue from its own software platforms, developed as part of a strategic revamp dubbed 'Infosys 3.0'. It has also lagged rivals in acquisitions and in bidding for contracts to manage big computer and storage networks. Mohandas Pai, former Infosys chief financial officer, said the company needed to revive its sales efforts. "If he focuses on that, gets them going again, things will be back to normal. After all, the biggest thing is sales, not delivery," said Pai, now chairman of an education company. Investors are banking on Murthy to set a clear strategy for the company. "Now what happens is even if the ship runs into an iceberg there is one man who's doing it," said Phani Sekhar, a fund manager with Angel Broking in Mumbai, which owns shares in Infosys. "At least, it will not be drifting anymore."
Big churn begins
Balakrishnan to head Lodestone New Delhi (PTI): In the first significant reshuffle after recalling founder N R Narayan Murthy, Infosys replaced its subsidiary Lodestone's Chairman BG Srinivas with V Balakrishnan, its former chief financial officer. Balakrishnan, a director on the country's second largest software services firm's board, headed Infosys's BPO, Finacle and India Business Unit operations. Srinivas, too a board member, was head of the firm's Europe and global financial services and insurance. Before heading Infosys's BPO and Finacle operations, Balakrishnan served as the firm's Chief Financial Officer. The change assumes importance in the backdrop of Infosys calling back its founder N R Narayan Murthy as the executive chairman following the firm's repeated below-expected performance and its loosing market share to rivals like TCS, Cognizant and HCL Technologies.
Murthy
Infosys in a statement said: "V Balakrishnan has been appointed the Chairman of Lodestone and BG Srinivas will continue to be a key member of the Board of Lodestone." However, the company termed the move as a regular shuffling of portfolios. Infosys said: "This move is part of the regular re-allocation of portfolios to meet the company's strategic objectives. The integration of Lodestone is progressing as per plan." In its annual report for 2012-13, Infosys said the board of directors of Lodestone include BG Srinivas, Ronald Hafner, V Balakrishnan, Stephen R Pratt and UB Pravin Rao.
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