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Infosys's announcement of leadership succession is largely in line with street expectations, with
the current CEO and COO remaining at the helm of operations. However, decisions on selecting
senior leaders for board positions replacement of the COO have been deferred for now.
No major changes beyond street expectations
Infosys's announcement of leadership succession is largely in line with street expectations,
with the current CEO and COO remaining at the helm of operations.
Appointing Mr KV Kamath as Chairman of the Board with Mr S Gopalakrishnan (KRIS) to be
appointed as Executive Co-Chairman of the Board will further strengthen Infosys's history of
maintaining a good operational balance of aggression, governance, discipline and ethics in
Infosys's operations going forward.
However, selection amongst senior leaders for board positions and replacement of the COO
has been deferred for now.
Leadership succession of Infosys - key changes announced
Mr NR Narayana Murthy, current Chairman of the Board and Chief Mentor, will be appointed
as Chairman Emeritus effective 21 August 2011 (post his retirement as Chairman of the
Board). Post this appointment, Mr Murthy will not have a board seat and will continue to add
value to Infosys's senior management, board and employees if asked by them.
Mr SD Shibulal will be appointed as CEO and MD effective 21 August 2011 versus his current
position of COO and Member of the board. Infosys did not announce the replacement of COO
and said the decision will be taken at the appropriate time later.
Mr KV Kamath will be appointed as the Non-Executive Chairman of the Board effective 21
August 2011. Currently Mr Kamath is an Independent Director of Infosys.
Mr S Gopalakrishnan (KRIS) will be appointed as Executive Co-Chairman of the Board
effective 21 August 2011. Currently Kris is CEO and MD of Infosys.
New strategy of Infosys 3.0 driving further reorganisation
With changing client needs, Infosys has introduced its new strategy of "Infosys 3.0 - Building
Tomorrow's Enterprise". This strategy focuses more on partnering with clients to provide
business solutions rather than just providing traditional outsourcing services. Infosys is
looking to transform itself as Global Consulting and System Integration company going
forward.
As part of the strategy, Infosys has already announced the reorganisation of verticals into
broadly four verticals including: i) Financial Services and Insurance (FSI) - headed by Mr
Ashok Vemuri; ii) Manufacturing (MFG) - headed by Mr BG Srinivas; iii) Energy, Utilities,
Communications and Services (ECS) - headed by Mr Prasad Thrikutam; and iv) Retail, CPG
and Life Sciences (RCL) - headed by Mr UB Pravin Rao. In addition, Infosys has also created
a new vertical namely Public Sector and Healthcare.
Besides this, new verticalisation of the organisation will be now applied across all
geographies as compared to North American geography earlier. Infosys has also done the
consolidation of services offerings in three key groups including transformation, innovation
and operations. Consulting, Package Implementation and System Integration will form part of
Transformational services, Products/Platform/Solution/Tools will form part of the Innovation
and rest of the services will form part of operations.
Current composition of board and likely executives for the board seats
Currently Infosys has 15 board of directors with five being executive directors and 10 being
Non-Executive directors including Mr Murthy. With the recent developments, the number of
executive directors would be reduced to three post resignation/retirement of Mr Mohandas Pai
and Mr Dinesh. Even post August 2011, with Mr Murthy's retirement, one more board seat will
be vacant.
We believe the current five executive council members, including: i) Mr Ashok Vemuri - Head
of BFSI, ii) Mr BG Srinivas - Head of Manufacturing, iii) Mr Subhash Dhar - Head of
Communication, Entertainment and Media, iv) Mr Kakal - Head of Enterprise Solution and v)
Mr Bala - CFO, are the likely eligible candidates to be elevated to board.
Elevating all executive council members will lead to 17 board members (post vacancy of Mr
Mohandas Pai, Mr Dinesh and Mr Murthy), which is higher than the maximum limit of 16.
Infosys in the past has always given importance to merit of the professionals, relevance of the
portfolio with regards to changing market dynamics/customer needs, and fair treatment of all
the senior leaders.
Considering verticalisation across geographies versus the earlier model of just in North
America, we believe the heads of verticals selling multiple services to clients across the globe
may represent the business trends at the board level. Another notable point in the new
verticalisation is merging Communication as part of the ECS vertical now headed by Mr
Prasad Thrikutam versus Communication earlier headed by Mr Subhash Dhar.
Infosys announced it would elect three senior leaders within the company for the executive
role at the board on 11 June 2011. Regarding replacement of the COO post Mr Shibulal
becoming CEO and MD, Infosys will decide later at an appropriate time. This does not rule
out the possibility of a discontinuation of the COO role, in our view, as followed in some of the
other companies.
Execution in FY12 remains key
Infosys's much lower than expected 4Q11 results, FY12 EPS guidance and concern relating to
implication of senior management restructuring lead to +10% correction post the 4Q11 results.
We continue to believe FY12 margins, and hence EPS guidance, is conservative and expect
material outperformance. As Infosys's new strategy of Infosys 3.0 may require higher investments
initially (please see our flashnote 'Pushing non-linear delivery strongly', released on 23 March
2011), management continues to focus on its industry-leading profitability. We therefore believe
that Infosys will continue to maintain a fair balance between margins, growth and investment.
With Infosys's announcement of leadership succession largely in line with street expectations,
execution in FY12 is key going forward.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Infosys's announcement of leadership succession is largely in line with street expectations, with
the current CEO and COO remaining at the helm of operations. However, decisions on selecting
senior leaders for board positions replacement of the COO have been deferred for now.
No major changes beyond street expectations
Infosys's announcement of leadership succession is largely in line with street expectations,
with the current CEO and COO remaining at the helm of operations.
Appointing Mr KV Kamath as Chairman of the Board with Mr S Gopalakrishnan (KRIS) to be
appointed as Executive Co-Chairman of the Board will further strengthen Infosys's history of
maintaining a good operational balance of aggression, governance, discipline and ethics in
Infosys's operations going forward.
However, selection amongst senior leaders for board positions and replacement of the COO
has been deferred for now.
Leadership succession of Infosys - key changes announced
Mr NR Narayana Murthy, current Chairman of the Board and Chief Mentor, will be appointed
as Chairman Emeritus effective 21 August 2011 (post his retirement as Chairman of the
Board). Post this appointment, Mr Murthy will not have a board seat and will continue to add
value to Infosys's senior management, board and employees if asked by them.
Mr SD Shibulal will be appointed as CEO and MD effective 21 August 2011 versus his current
position of COO and Member of the board. Infosys did not announce the replacement of COO
and said the decision will be taken at the appropriate time later.
Mr KV Kamath will be appointed as the Non-Executive Chairman of the Board effective 21
August 2011. Currently Mr Kamath is an Independent Director of Infosys.
Mr S Gopalakrishnan (KRIS) will be appointed as Executive Co-Chairman of the Board
effective 21 August 2011. Currently Kris is CEO and MD of Infosys.
New strategy of Infosys 3.0 driving further reorganisation
With changing client needs, Infosys has introduced its new strategy of "Infosys 3.0 - Building
Tomorrow's Enterprise". This strategy focuses more on partnering with clients to provide
business solutions rather than just providing traditional outsourcing services. Infosys is
looking to transform itself as Global Consulting and System Integration company going
forward.
As part of the strategy, Infosys has already announced the reorganisation of verticals into
broadly four verticals including: i) Financial Services and Insurance (FSI) - headed by Mr
Ashok Vemuri; ii) Manufacturing (MFG) - headed by Mr BG Srinivas; iii) Energy, Utilities,
Communications and Services (ECS) - headed by Mr Prasad Thrikutam; and iv) Retail, CPG
and Life Sciences (RCL) - headed by Mr UB Pravin Rao. In addition, Infosys has also created
a new vertical namely Public Sector and Healthcare.
Besides this, new verticalisation of the organisation will be now applied across all
geographies as compared to North American geography earlier. Infosys has also done the
consolidation of services offerings in three key groups including transformation, innovation
and operations. Consulting, Package Implementation and System Integration will form part of
Transformational services, Products/Platform/Solution/Tools will form part of the Innovation
and rest of the services will form part of operations.
Current composition of board and likely executives for the board seats
Currently Infosys has 15 board of directors with five being executive directors and 10 being
Non-Executive directors including Mr Murthy. With the recent developments, the number of
executive directors would be reduced to three post resignation/retirement of Mr Mohandas Pai
and Mr Dinesh. Even post August 2011, with Mr Murthy's retirement, one more board seat will
be vacant.
We believe the current five executive council members, including: i) Mr Ashok Vemuri - Head
of BFSI, ii) Mr BG Srinivas - Head of Manufacturing, iii) Mr Subhash Dhar - Head of
Communication, Entertainment and Media, iv) Mr Kakal - Head of Enterprise Solution and v)
Mr Bala - CFO, are the likely eligible candidates to be elevated to board.
Elevating all executive council members will lead to 17 board members (post vacancy of Mr
Mohandas Pai, Mr Dinesh and Mr Murthy), which is higher than the maximum limit of 16.
Infosys in the past has always given importance to merit of the professionals, relevance of the
portfolio with regards to changing market dynamics/customer needs, and fair treatment of all
the senior leaders.
Considering verticalisation across geographies versus the earlier model of just in North
America, we believe the heads of verticals selling multiple services to clients across the globe
may represent the business trends at the board level. Another notable point in the new
verticalisation is merging Communication as part of the ECS vertical now headed by Mr
Prasad Thrikutam versus Communication earlier headed by Mr Subhash Dhar.
Infosys announced it would elect three senior leaders within the company for the executive
role at the board on 11 June 2011. Regarding replacement of the COO post Mr Shibulal
becoming CEO and MD, Infosys will decide later at an appropriate time. This does not rule
out the possibility of a discontinuation of the COO role, in our view, as followed in some of the
other companies.
Execution in FY12 remains key
Infosys's much lower than expected 4Q11 results, FY12 EPS guidance and concern relating to
implication of senior management restructuring lead to +10% correction post the 4Q11 results.
We continue to believe FY12 margins, and hence EPS guidance, is conservative and expect
material outperformance. As Infosys's new strategy of Infosys 3.0 may require higher investments
initially (please see our flashnote 'Pushing non-linear delivery strongly', released on 23 March
2011), management continues to focus on its industry-leading profitability. We therefore believe
that Infosys will continue to maintain a fair balance between margins, growth and investment.
With Infosys's announcement of leadership succession largely in line with street expectations,
execution in FY12 is key going forward.
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