Indiscretions of the blue-eyed software czar

Indiscretions of the  blue-eyed software czar

Man's peccadilloes and indiscretions sometimes eclipse stellar achievements in other formidable spheres. At times, one may have to pay a heavy price...

Man's peccadilloes and indiscretions sometimes eclipse stellar achievements in other formidable spheres. At times, one may have to pay a heavy price if the fall in grace is from a high pedestal due to a perceived human weakness, regardless of the veracity of the charges.

A case in point is the phenomenal rise and repeated fall of Phaneesh Murthy, disgraced CEO of Nasdaq-listed software services firm iGate who was sacked on Tuesday for his failure to disclose a personal relationship. He has a bright professional record that few manage to achieve in their late forties, but his relationships with women proved to be the nemesis of his professional life; not once, but twice.

Murthy was actually on an impressive comeback trail, after he lost face in 2002. The current indiscretion could blight his career. A The matter surfaced after a company employee, Araceli Roiz, 31, filed a complaint of sexual harassment against Murthy, 48, with the board. Araceli Roiz is the global head for investor relations at iGate and is based in Fremont, California. She has worked with the company for over three years.

Rules of US Securities and Exchange Commission require the disclosure of material relationships between key board committee members. Murthy's claims that he had already communicated to the board the nature of his affair with Roiz in the first week of May did not hold water. After sacking Murthy, iGate in a statement pointed out that in its investigation it had found that Murthy's indiscretion did not violate the company's harassment policy.

Murthy's dismissal comes just when he was shining in the software firmament after the leveraged buyout of Patni in 2011 for $1.2 billion, nearly thrice the size of iGate.

He had lost his job at Infosys in 2003 for carrying on a sexual relationship with his secretary. He then started an IT company Quintant Systems, which was acquired by iGate. Murthy raised the then little-known, loss-making company into one that is in the reckoning among the majors today.

Upon building iGate, Murthy got back at sector leaders through bold advertising and marketing campaigns in world's leading financial dailies and magazines. In what amounted to questioning the status quo, Murthy challenged the traditional outsourcing industry model of charging clients for the number of hours put in by engineers on projects. Instead, he said, iGate would charge only for discrete business outcomes agreed upon with clients.

Rivals discounted Murthy's ventures as rhetoric. Today, the outcome-based model is fast gaining currency in the outsourcing industry. Analysts now say that it is only a matter of time before everybody jumps on the bandwagon. Few would have imagined, even in their wildest dreams, that Phaneesh's dizzy rise would be cut short by yet another act of indiscretion.

A decade ago, when Murthy was at Infosys, he was the blue-eyed boy of co-founder NR Narayana Murthy. He already had a board seat. The sexual harassment allegations there, leveled by Reka Maximovitch, cost him his job, his reputation and ruined his professional achievements of several years.

Reka Maximovitch is an American citizen of Bulgarian descent. She sued Phaneesh Murthy for sexual harassment in 2002 and precipitated his departure from Infosys. Infosys settled the lawsuit for $3 million.

Jennifer Griffith is another Infosys employee in the US, who alleged that Murthy sexually harassed her. Murthy, then CEO of iGate, claimed the case was 'garbage'. He later settled the suit for $800,000.

As of now, Murthy, who has termed the latest case as one of "extortion", may lose as much as $15.09 million (about Rs. 84 crore) in severance benefits after being sacked by the US-based firm for professional misconduct. He is entitled to a post termination benefit of $6,000 per month till he and his spouse reach the age of 65.

Normally he would have got a lump sum payment of 12 months' severance at $1,000,000, going by iGate's filing before the US Securities and Exchange Commission (SEC) in March 2013. However, since his termination was for professional misconduct, he could lose the severance benefits.

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