Infosys Technologies, India’s second-largest technology outsourcing company by revenue, has unveiled a major shake up of its top management team, just two weeks after the company released its third set of disappointing quarterly results in succession.
The Bangalore-based company named veteran banker KV Kamath as its new chairman, and promoted S.D. Shibulal, a co-founder of the group and its chief operating officer, to chief executive. S Gopalakrishnan, the current chief executive, will become executive co-chairman.
This is the first time since Infosys was founded three decades ago that an outsider has been picked to lead the group, which has traditionally chosen top executives from within its own ranks.
The appointment of Mr Kamath, former chief executive of ICICI, India’s largest private sector bank, was welcomed by local opinion makers, however, some analysts warned that the move would raise concerns among investors as the shake-up was supposed to bring new faces into the business.
“Kamath is a positive choice in terms of governance and wisdom but it will not radicalise the business strategy,” said Pradeet Udhas, a founding partner at KPMG India. “The day-to-day business will remain in the hands of Shibulal and Gopalakrishnan.”
The changes will be effective from August when NR Narayana Murthy, the leading founder of Infosys and current chairman, retires.
“As we look ahead, we will ensure that this leadership transition is smooth as all other transitions have been in the past,” Mr Shibulal said. “We are also making other organisational changes to strengthen our market position and ability to serve our clients better.”
Infosys, which is known for being the bellwether of India’s flagship $60bn outsourcing industry, has been steadily losing market share to both larger rival Tata Consultancy Services and Cognizant, a rising star in the sector.
Shares in Infosys plunged nearly 10 per cent last month on the day it reported disappointing annual results a downbeat outlook for the next year. The group expects its revenues to grow by between 15-17 per cent, much lower than the 20 per cent analysts had been expecting.
Infosys, whose clients include Goldman Sachs and BP, was hit by the global economic crisis more than its peers as it struggled to innovate and find new markets for expansion.
The biggest concern for the group is the slow and uncertain recovery in the US and European economies, according to Ashok Vemuri, the group’s New York-based global head of banking and capital markets services.
“Europe and North America are concerning,” Mr Vemuri told the Financial Times. “As long as there is uncertainty in the US ahead of the [2012 presidential] elections and the European economy there will always be a cloud over our outlook.”