Making the company private is not a solution
R Chandrasekaran
CHENNAI: Former chairman of the technology bellwether Infosys, N.R. Narayana Murthy scotched talks of his return to head the company he has co-founded and replicate what Apple’s Steve Jobs did to turnaround the company.
The clamor for his return to head the company came on the heels of its struggle to maintain growth and provided outlook that was below than the industry body. However, rivals such as Tata Consultancy Services and Cognizant Technology Solutions have provided an upbeat outlook triggering for a frenzied activity for his return.
While stating that he had no intention of coming back to Infosys’ decision making process, he gave enough indications that what will happen tomorrow is difficult to be predicted. The former chairman termed as speculation when questioned whether anyone from Infosys or the board has discussed his return to the company he once co-founded.
In an interview published in Live Mint, Murthy refused to be drawn on the question of the company’s outlook saying that he is not the right person to answer since he is not an officer of Infosys. For the questions relating to Infosys, not only he remained cautious but also evaded direct answers. For instance, the company’s provided an outlook of 6 – 10 percent for the next fiscal year.
Similarly, he was asked whether the current period is a tough one for Infosys to steer through. The former chairman has not committed anything and merely said he is not an insider and that the question should be directed towards the chairman and the executive management.
To another question whether the transformation being led by S.D. Shibulal, the current CEO of the company, is painful and that whether the transformation was communicated very well, Murthy evaded a direct answer. Without directly saying whether yes or no, he said, “the reality is that the world has accepted quarterly earnings. So we all have to play the game. If we can’t stand the heat in the kitchen, we cannot be cooks. I think it’s very important for us to give very clear statements on what investments are needed, what impact it will have on earnings, so that you will have a stronger company in the long run. I think investors will accept it because a lot of them are here for 3, 5 years. It’s very important for any entrepreneur to clearly communicate that in the short term, investments are needed.”
The former chairman of Infosys believes that taking the company private will not solve the problem when he was asked whether the transformations will be better served by going private, citing the case of Dell and whether it was an option. Instead, he said that investors must be communicated to effectively that “in order to enhance shareholder value in medium term, they have to take the organization through a tough period in short term.”
Murthy was also responding to a question on what the global business leaders talk about doing business in India particularly with many scams coming to the fore. He was candid when he said that India had lost the sheen that it had in early 2000. He called for serious efforts to remove the obstacles and get back that sheen in the face of a decade low GDP, widening of current account as well as fiscal deficits.
To contact the author, e-mail: rchandrasekaran@americanbazaaronline.com