The Hindu Business Line : Tough challenges ahead for Infosys' new CEO

TAKING OVER: (from Left) Mr Nandan Nilekani, Co-Chairman, Infosys; Mr N.R. Narayana Murthy, Chief Mentor and Chairman; and Mr S. Gopalakrishnan, CEO, at the company's AGM in Bangalore on Friday. — G.R.N. Somashekar

Bangalore June 22

Amidst challenges such as a rising rupee, wage inflation and stronger competition from the IT MNCs, Mr S. Gopalakrishnan, took over as the Chief Executive Officer of Infosys Technologies Ltd from Mr Nandan Nilekani on Friday.

At the 26th annual general meeting of Infosys, shareholders unanimously ratified the appointment of Mr Gopalakrishnan as the CEO for the next five years. Shareholders also approved the appointment of outgoing CEO, Mr Nandan Nilekani as the co-chairman and Mr S.D. Shibulal as the Chief Operating Officer (COO).

"These transitions reinforce the efficacy of our long-term succession planning," Chairman, Mr N.R. Narayana Murthy, told shareholders.

Replying to a shareholder's query, Mr Gopalakrishnan, who earlier was the company's COO and Deputy Managing Director, said Infosys had taken steps like hedging to deal with the rising rupee in the short-term. In the medium to long-term, measures such as improved services mix, geographical mix, increasing revenue per person and productivity would help in offsetting the impact. "We have to work better and smarter," he said.

A one per cent rise in rupee would impact Infosys' operating profit margins by 0.5 per cent. The value of rupee has risen by 9 per cent against the US dollar since December 2006. Infosys derives about 63.5 per cent of its revenues from the US and about 26 per cent from Europe.

Expressing confidence that Infosys will continue to do well and prosper under the leadership of new CEO, Mr Nilekani said the company was well placed and emerged as a leader in the new business model of global delivery model.

Tracing developments at Infy under his leadership, Mr Nilekani said the company has grown at a compounded annual growth rate of 41 per cent in spite of challenges such as the technology slowdown and 9/11 incidents in the US, and the outbreak of SARS, among others. The company has scaled its headcount to over 72,000 from 10,700 five years ago, while managing to expand its client base significantly by signing up much larger clients in recent years, he said.

Shareholders also approved the re-appointment of Mr T.V. Mohandas Pai, Mr S.D. Shibulal, Mr K. Dinesh, Mr Deepak M. Satwalekar and Prof Marti.G. Subrahmanyam as the directors.

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