Infosys CEO Resigns; Vishal Sikka Blames ‘Distractions and Disruptions’
Embattled Infosys CEO Vishal Sikka has resigned, the giant IT consulting company’s board of directors has confirmed. The resignation stunned Infosys investors and raised fresh concerns about the IT consulting company’s leadership, corporate governance and business evolution.
In Sikka’s resignation letter, he described a continuous stream of distractions and disruptions over the recent months and quarters, increasingly personal and negative as of late, as preventing management’s ability to accelerate the company’s transformation.
Infosys stock fell roughly 7 percent when the news was announced.
Infosys Board Blames Critics for Resignation
The board offered this response to Sikka’s resignation:
“The Board understands and acknowledges Dr. Sikka’s reasons for resignation, and regrets his decision. In particular, the Board is profoundly distressed by the unfounded personal attacks on the members of our management team that were made in the anonymous letters and have surfaced in recent months. As the Board has previously stated, a series of careful investigations found no merit to the unsubstantiated and anonymous allegations that had been asserted. The Board denounces the critics who have amplified and sought to further promote demonstrably false allegations which have harmed employee morale and contributed to the loss of the Company’s valued CEO.”
A search for a new CEO is under way. In the meantime, Infosys says:
- Sikka has been appointed Executive Vice Chairman effective today, and will hold office until the new permanent CEO and Managing Director takes charge, which should be no later than March 31, 2018. Sikka will continue to focus on strategic initiatives, key customer relationships and technology development, the board said.
- U. B. Pravin Rao has been appointed Interim CEO and Managing Director reporting to Dr. Sikka under the overall supervision and control of the board.
Successful Track Record?
Infosys pointed to Sikka’s success leading the company, noting that he grew revenues from $2.13 billion in Q1 2015 to $2.65 billion this past Q1.
Still, the company has been under fire in recent quarters. As Bloomberg noted today:
“Infosys has been battered by allegations of poor corporate governance by Murthy and fellow founders, including criticism of acquisitions and executive pay. Sikka’s exit marks a blow to the company as it struggles with challenges including rapid industry changes and evolving needs of a customer base that includes Goldman Sachs Group Inc. and Daimler AG.”
We’ll be watching to see who lands in the permanent CEO role.