CFO’s exit leaves questions over Infy’s succession plans

Is Infosys CFO V. Balakrishnan or ‘Bala’ being groomed to take over the corner office of the $7-billion IT services company?

The sudden announcement of ‘Bala’ moving from his existing role to a completely new role of handling India business as well as the BPO vertical, is being seen with much trepidation by the investors especially at a time when the company is going through disappointing performance. There have been many changes at the helm in too short a time which one does not usually witness in an Indian company.

That a very conservative company like Infosys has gone ahead to make these changes is something analysts are unable to stomach. “I think Bala is stepping down at the wrong time. He should still be around at a time when Infosys is going through a tough situation,” an analyst with Asit C. Mehta Investment Intermediates said.

Ankita Somani, Research Analyst-IT & Telecom, told

Business Line that this announcement causes a lot of concern amongst investors, as it does not give a good picture of the company. Similarly, Moshe Katri, MD, Cowen and Co, in a note said with Balakrishnan being re-assigned, investors still do not get a feeling that the turmoil at Infosys is over. But Bala himself doesn’t seem to mind it. “I am away from crunching numbers now which makes my mind free to do what I want,” a rather relaxed Balakrishnan told Business Line . The current CEO and Managing Director, Shibulal, who has another two-and-half-years before he demits office, ducked the question when asked about his successor. “There is a nomination committee which takes cares of such things. At an appropriate time, it will take the right decision,” Shibulal said.

But how important is the role of heading India as well as the BPO business of Infosys? Balakrishnan has never headed a business or a vertical for Infosys, which could be the only gap in his rather impressive CV, which includes steering the company through a listing at the Nasdaq, along with the former CFO, T. V. Mohandas Pai.

The right opportunity

Steering the India business will give him the opportunity to showcase his skills and talent in grabbing contracts, closing deals and networking a lot more than he usually does as a CFO. Pai, in a telephonic interview with Business Line, said usually a company galvanises itself when it is in danger of losing its top position in the industry.

Pai, who knows a thing or two about succession plan and who was once tipped to head Infosys, said there is no truth in the charge that his successor was moved out because he was unwilling to compromise on margins and pricing. “This rigidity thing I feel has been blown out of proportion. Infosys is now a far more flexible and aggressive organisation,” he pointed out.

Pai said Balakrishnan had performed his role admirably and had been moved to take on bigger responsibilities. He could be right because the India business has not performed according to expectations. On a sequential basis, revenues from India business declined 15.4 per cent.

BPO arm

The BPO arm which at present is a $500 million business, too, had a flat quarter, while Finacle is still in early growth phase. This is where Balakrishnan’s skills will be tested. If he can turn around these three businesses, he will be ripe for the top job and Infosys will be too happy to hand over the reigns to a company veteran of 17 years.