Vishal Sikka, the first non-founder managing director & CEO of the Indian software major Infosys has resigned.
Three years after he took charge at the $10 billion IT behemoth, Sikka has finally quit following several months of discord with the company’s founders, including NR Narayana Murthy.
“Over the last many months and quarters, we have all been besieged by false, baseless, malicious, and increasingly personal attacks,” Sikka said in his resignation letter. “Allegations that have been repeatedly proven false and baseless by multiple, independent investigations. But despite this, the attacks continue, and worse still, amplified by the very people from whom we all expected the most steadfast support in this great transformation.”
Here is a timeline of Sikka’s troubled tenure at Infosys.
June 2014: Infosys announces the appointment of Vishal Sikka as its first non-founding CEO & managing director since the company’s inception over three decades ago. “Vishal brings valuable experience as a leader of a large, global corporation. His illustrious track record and value system make him an ideal choice to lead Infosys,” Infosys chairman NR Narayana Murthy says. Between 2013 and 2014, the firm had seen at least 13 top-level exits.
Aug. 2014: A week into his new job, Sikka promotes over 5,000 employees, in an attempt to retain staff at the Bengaluru-based company.
Oct. 2014: Murthy resigns as Infosys chairman. “We will focus heavily on growth, and for that we need the benefit of our cash reserves,” Sikka says in an interview (paywall) to Financial Times. “My plan will not be to what happened with earlier generations of low-grade software, of just always cutting costs, which is just a downward spiral. This is about renewing ourselves into a next generation services company.”
Dec. 2014: Sikka gifts iPhone 6s to 3,000 top performers. “Everyone around you looks up to you and it is this approach to work that will help us evolve into the next-generation IT services company that we aspire to be—with you at the heart and centre of it,” he tells employees in an email.
Feb. 2015: Infosys’s financials begin to improve. The company beats market estimates for the October-December quarter, declaring a 13% year-on-year growth in net profit and 26.7% rise in operating margins. It also announces a 7-9% growth forecast for sales for the year ending March 2015. The company acquires Israel-based software services company Panaya for $200 million. “The acquisition…will help amplify the potential of our people, freeing us from the drudgery of many repetitive tasks, so we may focus more on the important, strategic challenges faced by our clients,” Sikka says.
April 2015: The company announces the acquisition of e-commerce services provider Skava for $120 million. “The acquisition of Skava is part of Infosys’s strategy to help clients bring new digital experiences to their customers through IP-led technology offerings, new automation tools and unparalleled skill and expertise in these new emerging areas,” Infosys says in a statement. Sikka announces his “vision 2020,” targets $20 billion revenue for Infosys by the year 2020.
June 2015: On June 01, the company decides to allow all employees to wear denims and casual clothes to work throughout the week. While this may be normal for several technology companies in the US and elsewhere, it is a first for the more traditional Indian IT services sector. R Seshasayee, vice-chairman at truck & bus maker Ashok Leyland, appointed new non-executive chairman.
Oct. 2015: Rajiv Bansal, CFO, resigns. “I lived my dream at Infosys,” Bansal says in a letter. “There are very exciting opportunities in the world. I want to do something more exciting, more challenging, something where I can add more value. Looking forward to the next stage of my life.” He joins cab aggregator Ola as CFO in December.
Feb. 2016: The Infosys board raises Sikka’s compensation by 55% to $11 million. A few months later, only around 23.57% of promoter votes are cast in favour of a resolution reappointing Sikka as CEO. He was appointed CEO in 2014 for a five-year term. “I am not disappointed. I don’t care. I have 100% backing of the board and support from the shareholders,” Sikka says. “I still respect the founders. Why they did this, you should ask them.”
May 2016: Proxy advisory firms and analysts question the Rs23.02 crore severance pay, salary, and other benefits paid to Bansal.
Sept. 2016: Infosys stops paying the balance of Rs17.38 crore Bansal was to receive, as some of the company’s founders express their displeasure.
Nov. 2016: In a newspaper interview, Sikka says his job has affected his physical well-being. “My health has suffered for sure. It is a very complex transformation we are doing (at Infosys), far more complex than people understand,” Sikka says.
Dec. 2016: The founders, including Murthy, SD Shibulal, and Kris Gopalakrishnan meet V Seshasayee and Vishal Sikka, expressing their unhappiness with Seshasayee, citing corporate governance issues.
Feb. 2017: In a scathing interview Murthy questions the corporate governance practice at Infosys. “We have seen a concerning drop in governance standards at Infosys. Let me illustrate this with just one example. Providing huge severance pay (with 100% variable) to some departing employees while giving only 80% variable for employees in the company is one such example. Such payments raise doubts whether the company is using such payments as hush money to hide something,” he says.
Soon after, Seshasayee says says there is no conflict of interest between the founders and the board. Sikka says the talk about corporate governance was “distracting” and that he has good relations with the founders, including Murthy.
Shortly, an anonymous letter is sent to the Securities and Exchange Board of India and the US Securities and Exchange Commission alleging that the Panaya acquisition was overvalued. It is possible that some Infosys executives had benefited from the deal, the letter claims. Reports also emerge that former CFO Bansal wasn’t in favour of the deal.
June 2017: Infosys scraps Sikka’s target of $20 billion revenue by 2020. Reports emerge that the founders were planning to sell their stakes. “We would like clarify the reports in the media speculating on the plans of stake sale by the promoters. This speculation has already been categorically denied by the promoters,” an Infosys spokesperson says in a statement.
Meanwhile, two independent firms appointed by Infosys clear the company of all charges of financial impropriety in the Panaya and Skava deal. “We found no evidence whatsoever to support any of the new allegations in the complaints regarding wrongdoing by the company or its directors and employees, and those allegations were rebutted by substantial and credible evidence,” Gibson Dunn & Crutcher, a US-based law firm, says.
July 2017: Ritika Suri, an executive vice-president at Infosys, who was in charge of large deals and led the Panaya acquisition, resigns.
Aug. 2017: Infosys declines a request from Murthy to make public the report of Gibson Dunn & Crutcher.