Succession plan holds key for Infy's future growth

Bengaluru: Infosys' succession planning will emerge as the critical factor for driving its next phase of growth post incumbent chairman Nandan Nilekani hangs his boot in coming years.

According to experts, the company is likely to follow a structured approach in finding the next chairman- who will be a non-founder- that can work as a model for future appointments. Given the bitter experience of Infosys with a board headed by a non-founder chairman and professional CEO during 2014-17 period, the company will be careful in its selection process.

"Among the current founders, all are ageing. So, a non-founder chairman will come, maybe not now, but 5 or 10 years later. As any of the founders' families is not involved in the business of Infosys, the only possibility is to get a non-founder chairman," Shriram Subramanian, co-founder proxy advisory firm, InGovern Research Services told Bizz Buzz. The process will be a lot more structured this time, he added.

On the occasion of celebrations on completing 40 years in the business on December 14, co-founder and non-Executive Chairman Nandan Nilekani said that he had the onerous task of finding a non-founder chairman as part of succession planning.

"My challenge is a little more acute, because I have some founder's clout, but I'll be handing over to a chairman at whatever point that I exit from the scene, who will be a non-founder. There's no plan B now. If I hand over to somebody and it doesn't work out, there's no Plan B. I can't come back at 75 or something. So there's no plan B," the 67-year-old Nilekani has said.

"We have to make sure that it's done well and that it perpetuates after that, too. It's not just one transition. You have to put in place a system where there's perpetual transitions, both of the chairman and the CEO," he has said.

Infosys faced friction between the board and founders during the 2014-17 period, over corporate governance issues. This had eventually led to resignation of the then CEO Vishal Sikka, and chairman along with some board members. Growth of the company also suffered during this period.

This had led cofounder Nandan Nilekani coming back as non-executive chairman of Infosys. The second largest IT company has been witnessing one of the industry-leading growth rates under the current CEO Salil Parekh and chairman Nilekani.

Industry watchers also said that there is less possibility of any of the founders' children taking up role in Infosys' management or board.

"It is difficult for a company of this size to (have founders' children) getting involved at this point of time. If they do it, it will be viewed as very negative," said Subramanian.

Infosys has a well-diversified corporate ownership structure with a sound holding of domestic institutions and FIIs. ­