Nandan Nilekani’s return to Infosys as non-executive chairman is the best thing that could have happened to the beleaguered company after the exit of Vishal Sikka as CEO. Tactically speaking, it’s a brilliant move even if stopgap, one that will draw upon the immense goodwill and acknowledged skills of Nilekani for the benefit of Infosys.

Infosys needed to do something quickly to reassure customers, investors and employees and what better than getting back a promoting shareholder with an impeccable reputation and track record?

Biggest challenge Yet, what’s good for Infosys need not necessarily be so for Nilekani. One has to admire his decision to return under difficult circumstances to the company he co-founded but there’s little doubt that he’s up against the biggest challenge of his career — one that could either build further on his reputation or dent it. And we’re not talking about stabilising operations, finding the next CEO, rebuilding the board of directors, and its relations with Narayana Murthy. These would be relatively easy for Nilekani given his capabilities and contacts. His biggest challenge will be in relation to the Panaya acquisition and the demand by Murthy for public release of the investigation reports. Will he release them or won’t he?

Let’s consider two possible scenarios that might emerge after Nilekani reviews the reports. First, let’s assume there’s nothing in the reports that point to either governance failure or moral turpitude either against Sikka or any other individual. This is what the previous board under R Seshasayee claimed. Releasing the reports, then, will not look too good on Murthy who has been alleging wrongdoing in the Panaya deal. Murthy’s battle with the previous board will appear to have been completely misplaced. Will Nilekani want to show his mentor in poor light?

Now, let’s consider the second scenario — that’s there is enough in the investigation reports to prove a failure of governance or worse, acts of moral turpitude by either Sikka or someone else in the company. Releasing such a report might vindicate Murthy and prove him as having fought for the right cause, though, as some might point out, he need not have done so in public.

Yet, such an act may open up a Pandora’s box. Once wrongdoing is proven and acknowledged, shareholders could rise in protest and class-action suits claiming damages are a real possibility. Indeed, in the immediate aftermath of Sikka’s resignation, some activist-shareholders did initiate moves to collectively act against Infosys. Regulators may also be forced to step in to investigate the deals and the Infosys stock might careen off the road. Will Nilekani want to risk all this just to prove his mentor right?

Tough choices The easy choice, of course, is to not release the report in public, irrespective of what it contains. But that would not go down well with the image of the new powers-that-be at Infosys or Murthy himself. Wasn’t the battle about making the reports public? Will it be possible for Murthy to back off now without losing face? Clearly, Panaya will be the proverbial hot potato in the hands of Nilekani.

And then, there is the issue of the previous board’s letter to the stock exchanges listing out charges against Murthy such as interference in the running of Infosys, with the threat of going public if his demands were not met. These are serious charges to make against the iconic promoter whose response is still awaited. But will the new board under Nilekani pursue them one way or the other? If these charges are baseless, then the new board should say so and redeem Murthy’s reputation. But what if there were even an iota of truth in the charges?

That brings us to the composition of the new board. Having been party to such a hard-hitting response to Murthy, the position of the likes of RaviVenkatesan and Kiran Mazumdar-Shaw becomes untenable in the new board headed by someone who has Murthy’s blessings. It’s surprising that Venkatesan managed to retain his board seat though he had to step down as co-chairman. There might be more exits ahead from the board as Nilekani builds his own team.

All of this points to an extended period of uncertainty for Infosys and its stakeholders. Nilekani will have to give it his all to ensure that his focus on business and building a new team is not diverted by the noise around. And on this will hinge not just the success of his second coming but also the fate of Infosys.