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Weak medicine in small doses
The newly announced Board changes at Infosys though on expected lines
are not in synch with its strategic vision. Infosys’ new-found focus on
high-yielding revenues i.e. consulting and IP creation and reversal of
financial underperformance c.f. peers demands immediate and more
significant management/board level changes. Deferment of the decision
to appoint more executive members to the Board is disappointing and
implies Infosys is postponing taking tough decisions on the succession
planning front. This keeps the organisation in a limbo and will likely
weigh on financial and stock performance for now. TCS is our top pick.
Management/Board changes on expected lines
K V Kamath (ex-CEO ICICI Bank) has been appointed as the new Chairman of
the Infosys Board replacing Narayan Murthy. Kris Gopalakrishnan (current
CEO) takes on a new position as Executive Co-Chairman while Narayan
Murthy has been appointed as Chairman Emeritus. S D Shibulal (current
COO) will take over as the new CEO. All changes are effective 21st Aug 2011.
Board composition is not in synch with Infosys’ new vision
Dropping of the word “Technologies” from the company name and the idea of
Infosys 3.0 indicates a greater thrust on consulting and other higher value
added services. Appointment of a few global CxOs on the Board would have
re-inforced this strategic shift. Unfortunately, Board composition at Infosys
remains inward looking and clearly out of synch with its new vision. Infosys’
Board continues to be comprised of thought-leaders, Indian industry
executives and a large number of its own employees who are highly capable
but do not have the same reference appeal in Infosys’ client markets as the
Board members of peers like Accenture, IBM and Cognizant.
K V Kamath has unique strengths but a much different philosophy
In our view, the appointment of K V Kamath as Chairman of the Board is
likely driven by three key factors: 1) He brings a charisma which was muchneeded
at Infosys after the exit of Narayan Murthy and Nandan Nilekani. 2)
His experience in succession planning at ICICI group will come in handy for
Infosys as professional managers are set to takeover after Mr Shibulal’s stint.
3) His familiarity with the State of Karnataka is an advantage given Infosys’
high asset base in the state. However, Mr Kamath’s philosophy of scale is at
odds to Infosys’ conservatism and marriage of the two could be a bit uneasy.
Tough decisions need to be taken for Executive Board additions
We are disappointed by the absence of announcement of the new Executive
Board members, which will now happen on June 11th. This implies Infosys is
finding it a bit tough to choose the first among equals in its professional
management cadre. The onus remains on Infosys to execute any changes
that may be pending, quickly and effectively. Deferment of such decisions
ends up being distracting for senior employees (who are in the reckoning)
and will continue to weigh on company performance in the near term.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Weak medicine in small doses
The newly announced Board changes at Infosys though on expected lines
are not in synch with its strategic vision. Infosys’ new-found focus on
high-yielding revenues i.e. consulting and IP creation and reversal of
financial underperformance c.f. peers demands immediate and more
significant management/board level changes. Deferment of the decision
to appoint more executive members to the Board is disappointing and
implies Infosys is postponing taking tough decisions on the succession
planning front. This keeps the organisation in a limbo and will likely
weigh on financial and stock performance for now. TCS is our top pick.
Management/Board changes on expected lines
K V Kamath (ex-CEO ICICI Bank) has been appointed as the new Chairman of
the Infosys Board replacing Narayan Murthy. Kris Gopalakrishnan (current
CEO) takes on a new position as Executive Co-Chairman while Narayan
Murthy has been appointed as Chairman Emeritus. S D Shibulal (current
COO) will take over as the new CEO. All changes are effective 21st Aug 2011.
Board composition is not in synch with Infosys’ new vision
Dropping of the word “Technologies” from the company name and the idea of
Infosys 3.0 indicates a greater thrust on consulting and other higher value
added services. Appointment of a few global CxOs on the Board would have
re-inforced this strategic shift. Unfortunately, Board composition at Infosys
remains inward looking and clearly out of synch with its new vision. Infosys’
Board continues to be comprised of thought-leaders, Indian industry
executives and a large number of its own employees who are highly capable
but do not have the same reference appeal in Infosys’ client markets as the
Board members of peers like Accenture, IBM and Cognizant.
K V Kamath has unique strengths but a much different philosophy
In our view, the appointment of K V Kamath as Chairman of the Board is
likely driven by three key factors: 1) He brings a charisma which was muchneeded
at Infosys after the exit of Narayan Murthy and Nandan Nilekani. 2)
His experience in succession planning at ICICI group will come in handy for
Infosys as professional managers are set to takeover after Mr Shibulal’s stint.
3) His familiarity with the State of Karnataka is an advantage given Infosys’
high asset base in the state. However, Mr Kamath’s philosophy of scale is at
odds to Infosys’ conservatism and marriage of the two could be a bit uneasy.
Tough decisions need to be taken for Executive Board additions
We are disappointed by the absence of announcement of the new Executive
Board members, which will now happen on June 11th. This implies Infosys is
finding it a bit tough to choose the first among equals in its professional
management cadre. The onus remains on Infosys to execute any changes
that may be pending, quickly and effectively. Deferment of such decisions
ends up being distracting for senior employees (who are in the reckoning)
and will continue to weigh on company performance in the near term.
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