Infosys faces leadership vacuum, exits a concern: Mohandas Pai

Former Infosys director TV Mohandas Pai on Monday told NDTV that Infosys is going through a leadership vacuum and the company needs to urgently sort out the issue of CEO succession for stability.

"There is a gap between the founder chairman and who is next. The current incumbent (SD Shibulal) will retire in 2015... In the next layer, people have been quitting. Two of the three directors appointed in the last two years have quit. This is a matter of concern... For large corporations this could be destabilizing," said Mr Pai, who is currently the chairman of Manipal Global Education. (Watch the full interview)

Infosys has witnessed a series of senior-level exits since co-founder Narayana Murthy returned as executive chairman in June 2013. On Friday, director V. Balakrishnan, who was seen as a candidate to become the next chief executive quit. Mr Balakrishnan is the eighth senior executive to resign from Infosys in the last six months.

Infosys shares traded lower on Monday, reacting negatively to the resignation of Mr Balakrishnan. (Read the full story here)

Mr Pai said shareholders and investors might be worried because of the recent exits. It's a matter of deep concern for investors if any large listed stock has such challenges about unstable top management at the top, he added.

"They had botched up the CEO succession last time. For the last two years, the company has been going up and down with no clarity where is it going. The board was forced to call the founder chairman back," Mr Pai said.

Mr Murthy's return has been applauded by investors, with the share price rising about 50 per cent so far this year to a record high, as its profit outlook is expected to improve on the back of stronger global demand and a weak rupee.

However, his return has also been followed by the departure of several executives, including its Americas head and global manufacturing chief, Ashok Vemuri.

Mr Pai, however, said the focus should be on "good people" who are quitting Infosys rather than the number of senior people quitting the company. All eight senior executives who quit were not running for CEO positions, he added.

Mr Pai also noted that the issue of top management succession is not limited to Infosys alone.

"There will be many contenders and many people will leave. It has happened in many companies. There is room for only one at the top," he said.