Vishal Sikka quits as Infosys CEO; U B Pravin Rao takes over
18 Aug 2017
Vishal Sikka yesterday resigned as managing director and chief executive of Infosys with immediate effect. He will be replaced by UB Pravin Rao. The board of the country's second-largest software services company accepted Sikka's resignation and appointed him as executive vice chairman.
Rao was named interim chief executive officer and managing director, and will report to Sikka under the overall supervision and control of the company's board.
Sikka's resignation came a day ahead of a company board meeting, which was supposed to consider a share buyback proposal.
In a filing to the BSE, the company said, ''Sikka reiterated his belief in the great potential of Infosys, but cited among his reasons for leaving a continuous stream of distractions and disruptions over the recent months and quarters, increasingly personal and negative as of late, as preventing management's ability to accelerate the Company's transformation.''
In a statement, Infosys said, "The succession plan for appointment of a new Managing Director and Chief Executive Officer has been operationalised by the Board and a search for the same has been commenced."
Sikka, a former top hand at German multinational software corporation SAP, said in his resignation letter, "I started my journey as the CEO of this iconic Company with a mission to transform it on the basis of software, especially artificial intelligence and innovation, enabled by education. Three years later, I feel proud of our progress and achievements, from profitable revenue growth to rapid purposeful adoption of software, new services and grassroots innovation, to the extraordinary recognition from our clients worldwide.
''I am deeply grateful to our Board for providing me with strong support and guidance, and especially wish to thank our chairman [Seshasayee] for his extraordinary and thoughtful stewardship, and look forward to working together on a smooth transition. Congratulations to my friend and partner Pravin on his appointment, and heartfelt thanks to all Infoscions for their warmth, amazing support and the sparks of their imagination."
This move comes a day after Infosys founder N R Narayana Murthy claimed in an email to some of his advisers that he had been told by at least three independent directors of the company that Vishal Sikka was more chief technology officer (CTO) material than CEO material.
Murthy has publicly lambasted Infosys over the last six or seven months, accusing it of lapses in corporate governance, which the company has denied repeatedly. In his latest email, he criticised the board for ''failing to uphold'' the company's famed governance standards and not creating ''checks and balances required in any well-run company''.
''I have nothing against Dr Vishal Sikka. I enjoy spending time with him. I have never commented about his strategy or its execution,'' Murthy wrote in the email. ''My problem is with governance at Infosys. I believe that the fault lies with the current board. If the board had not embraced inaction and had ensured proper governance then they could have created checks and balances required in any well-run company. That, alas, does not exist today.''
Infosys' founders, who still own 12.75 per cent of the firm, had questioned a recent pay rise granted to Sikka and the size of severance payouts given to others, including former finance head Rajiv Bansal.
But Sikka's approach to profitable growth delivered increase in liquid assets (including cash and cash equivalents) from $4.9 billion in June 2014 to $6.1 billion in June 2017. The company paid dividends of over Rs19,000 crore (including dividend distribution tax) over these three years.
When Sikka took over, Infosys was lagging behind industry growth. During his tenure as CEO, Infosys revenues have grown from $2.13 billion in Q1 of FY15 to $2.65 billion this past Q1, with strong margin performance and cash generation, throughout his tenure.
Infosys launched more than 25 new services under Sikka, which helped increase revenue by 8.3 per cent last quarter.
Under his leadership, Infosys developed and launched its artificial intelligence platform Nia, and already has more than 160 artificial intelligence scenarios deployed with more than 70 clients.
Infosys has also ventured into new horizons – both with design-thinking with clients and its startup investment fund.