T.V. Mohandas Pai is the Chairman of Manipal Global Education, but he is known for being the whiz kid at the $7-billion Infosys. He was picked by Infosys co-founder N.R. Narayana Murthy to head the finance function at the IT services major. Considered close to Murthy, Pai went on to become the company’s CFO and later a member on the board heading several key functions such as HR and administration. In an interview with Business Line , Pai talks about Murthy’s return to Infosys to revive the company.
Being someone who was handpicked by Narayana Murthy for the finance job at Infosys, how do you look at his comeback?
Murthy’s coming back is very good for the company because what it went through was a crisis of leadership. It was not firing on all cylinders. It did not focus on selling; decision-making was very slow. The back-office people were dictating policy. It was taking time to close deals and the sales staff was demotivated. Some of the legal cases also seem to have overwhelmed the company. People, especially in sales, left as a result. With Murthy coming back, there will be renewed focus on sales, incentivisation of the sales people and once that happens, delivery will pick up. There will be empowerment at the top because of the next level of leadership such as Ashok Vemuri, B.G. Srinivas and Bala (Krishnan), and Murthy will push them.
There were other issues as well. The company took silly decisions like cutting the travel budgets of people. If you have to sell you have to go and meet people. You can cut anything but not the travel budget. Murthy will push here. As Executive Chairman, he has to ensure that the management team performs, is empowered and incentivised. He will do all that. Therefore, his coming back is the best thing that could have happened.
Was there a fundamental issue with Infosys 3.0?
What is Infosys 3.0? It was a strategy to morph into a solution/enterprise-led consulting company. It is a natural corollary for Infosys which had built up about 25 per cent consulting and enterprise-solution led work. The idea was to expand that and change from selling projects to selling solutions. For this, the front-end needed more powers than the back-end. Those at the back-end such as people deciding pricing, legal aspects and so on, had to be subordinated to the front-end. That didn’t happen. This is a management challenge as it had to let go. The management had to be self-assured, which it was not. And that stalled the sales engine.
Do you think the passing of the baton to the founders ought to have been much more carefully done?
No, I think the next generation should have been put into place as leaders and the founders should have taken a back seat when Murthy left. It should have happened at that point in time but it didn’t. That’s why the company is facing a challenge now.
What do you think of the original philosophy of rotating leadership among the co-promoters?
It is basically flawed. You have a group of people who have been extremely successful for many years. They have created great value. It is human nature when you have created great value to become defensive and not aggressive. What you require is aggression in the marketplace for which you have to change the management team every 5-7 years. In the last 3-4 years, the company became defensive.
Will it be right to say that the IT sector has changed but Infosys failed to?
That is wrong. Competition is still doing very well. Why? Because the top management goes out into the market and grabs deals. Clients have complained that while competition closes contracts in a matter of 24 hours, Infosys takes three months for the same thing.
Why couldn’t the company get someone from outside?
The company has grown on the back of Murthy. It responds well to Murthy. Murthy left the agenda of putting in place the next level of leadership unfinished. He put his faith in the founder group, which was a mistake. Secondly, the company had a COO from 1999. In the last few years there was no COO. So it all coincided. When you were a $100-million company you had a CEO and a COO. When you were a $2-billion company, you had an Executive Chairman, CEO and COO and a good CFO. When you are a $7-billion company, you have a non-executive chairman, a CEO and no COO and a change in the CFO where an extremely capable person had to step down. So where is the management team?
Won’t it be too crowded at the top with an executive chairman, an executive vice-chairman and a CEO?
When Narayana Murthy is there, there is only one boss and that is Narayana Murthy. That is very clear. Except when he was the non-executive Chairman, there has always been only one boss. If he had devoted some care at that time, things would have been different now. He’s strong, everybody listens to him and he’s very decisive. He takes responsibility for decisions.
Do you think the present leadership will step down ahead of their respective terms?
That is for the board to decide. I strongly feel that the board should take accountability for what has happened in the last two years. This is basic corporate governance and Infosys is symbolic of the best in corporate governance practices.
Talking of corporate governance, what kind of practice is it to bring the son into the company, even if it is only as an executive assistant?
In a desperate situation, you cannot stand on niceties. You have to solve the problem and if that demands a little bit of compromise in what is not core, then you do it. Murthy has said he wants his son to help him because he has been out of touch. An executive assistant’s post may be one of power but is not one of control, is not client-facing and is not business leading. Don’t read too much into it. Three quarters down the line, if performance does not improve, you know that Murthy is accountable, right? So empower him, give him whatever he wants.
But is this not a breach of his own guidelines of not having relatives in the company?
Yes, it is a breach of the guideline, it is a breach of his norm on retirement age, it may even be a breach of everything that the man stood for. But the situation today is that of desperation. Drastic action is required and the board has asked him to return because it feels he can change the situation. Give him a chance to do that. If tomorrow the situation changes, everybody forgets all this.
So, will Mohandas Pai go back if called upon to by Murthy?
What is the point of my going back? The problem with the company is not one of having leaders to execute the strategies. They have excellent people in Ashok Vemuri, B.G. Srinivas and Bala. All three are extraordinarily talented. Why do they need someone like me? If someone like me goes there I will be overriding their ambition, making them feel inadequate, and they will all leave. In the last 25 years, I have seen three generations of leaders leave because the founders blocked the positions for themselves. Do I want another generation to leave? If the three people above leave, what is left in the company? There is another layer of people below them who are very good. They must be given their day under the sun. It’s a bad idea for me to go back. I wanted the next generation of people to come in. That’s why I left but I found another founder getting the position and I said it is a bad idea.
Have you got any feelers from Murthy?
I don’t want to comment. I have met him and discussed many things with him but I don’t want to comment.
How long will the investors and board give Murthy to turn things around?
Well, we should see results in maybe 3-4 quarters. I don’t believe there’s anything fundamentally wrong with the company. If he has to acquire companies to build revenues, he will do it. He will push people and if he has to let go some people to fine tune the organisation, he will do that, too. He is ruthless in executing his vision in all matters, except the founders. You can trust him to create a high performance culture in the company and turn it around. I have worked with him for 17 years and I know him very well. His only weakness is his loyalty to his co-founders and that has let him down.
Is the whole thing (of appointing Murthy) done to pre-empt shareholder pressure?
Well, yes, there was shareholder pressure. The AGM was the flashpoint where people would demand action.
All right, Murthy turns around the company but he will leave one day. What happens after that?
Murthy’s job is manifold. One, he has to rev up the sales engine because that is the starting point to set things right. Two, he has to empower people to perform their jobs. Three, he must restructure by shifting power from the back office to the front. Four, he must put the next generation into place and empower them to do well. And I will categorically state that in 2-3 years he should walk into the sunset, along with his son so that his legacy remains.
What is your take on whether Murthy will now succeed?
Ninety per cent I will put my bets on his success.
The 10 per cent? You have your own doubts…
The 10 per cent doubt is because he must not tilt in favour of his son. And he must not tilt in favour of his co-founders.
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