In a surprise rejig at the top, N.R. Narayana Murthy is back in Infosys as Executive Chairman at a time when the IT major has lost ground to rivals, and the stock has been among the worst performers in its league.

The company, which Narayana Murthy co-founded with six others for $250, is now a $7-billion software major but has been going through a rough patch the last two years. With Murthy’s appointment as Executive Chairman of the board and Additional Director for the next five years, the country’s third largest software exporter hopes to make up the lost ground. The board proposes to extend the retirement age for the Executive Chairman to 75 years.

“This is my second innings and an exciting, yet somewhat new level of challenges awaits me,” said Murthy who got to know of his role this morning. However, the shareholders have to give their nod to the appointment of Murthy, who retired from Infosys in August 2011 and has not held an executive role the last seven years.

K.V. Kamath, who was appointed Chairman after Murthy’s exit, will step down this month.

Salary is Re 1/year

Murthy will draw a token compensation of Re 1 a year and will be joined by his son Rohan Murty as an Executive Assistant, who will draw the same salary as Murthy. A team will be set up to aid Murthy, the details of which are to be worked out, according to company officials.

Along with the re-entry of Murthy, other changes in top management include Kris Gopalakrishnan’s re-designation as Executive Vice-Chairman, focussing on key clients and industry issues. S. D. Shibulal will continue to be the CEO and Managing Director.

Talks of Murthy coming back started on May 4, when Kamath along with the Infosys Board approached him to come back. Some industry watchers feel that this was Kamath’s way of bidding adieu to the company, as he was finding it hard to turn around the fortunes of Infosys. “The much-talked about push into financial services did not happen at the pace investors expected,” said an analyst from a Mumbai-based brokerage house requesting anonymity.

Others opine that the problem is more deep rooted and involves a combination on factors — from low employee morale, resulting in senior management exits, and shuffling of key roles.

“His decision to come back boosts employee morale and we expect him to take a look at some of the management reshuffles as the IT industry is not like a public sector company where roles can be changed at any point in time,” said A. K. Prabhakar, Senior Vice-President – Equity Research, Anand Rathi.

‘To add value’

His comeback raises questions around the success of the founder-CEO model. Murthy defends this and says he is there to add ‘value’ to the company. “It is 11 years since I stepped down from CEO and even when Gopalakrishnan stepped down, we grew 25 per cent in dollar terms. Shibulal’s decision to change the business model, with Infosys 3.0 as the nucleus will be judged over a period of time and there have been plenty of examples where CEOs have had to take hard and timely decisions.”