Business
The decision to recall retired co-founder N. R. Narayana Murthy for the role of executive chairman will boost morale but won't solve the fundamental problems in the outsourcer's sales model, according to an analyst.
Forrester India vice president Manish Bahl told ZDNet the move, which also sees Murthy's son join the Chairman's office, will ease investor concerns at a challenging time for the company.
Infosys executive chairman
However, they won't necessarily solve the problem of declining margins in the core business of the outsourcer, whose Q4 profit dropped by 4.1 percent to US$444 million.
"I believe Murthy will be more focused on putting company’s strategy to work than making too many changes within/for the organization," Bahl said. "Moreover, considering the conservative view of company’s board we shouldn't expect many bold decisions on oversees acquisitions, bringing people from outside as part of the management, among others in the near term."
He pointed out the company needed to move away from an inside-out to an outside-in approach to continue to justify its "premium" brand in the long run.
T.V. Mohandas Pai, former director at Infosys and currently chairman of Manipal Global Education, told Livemint that it was just like Steve Jobs coming back to Apple for a second time.
"The company had become dysfunctional and was not operating properly, so he came back. Some companies respond to charismatic, strong leaders. They look up to such leaders, their voice is the law and they respond very well... The fact is things have not worked recently at Infosys, Murthy should come back and set it right. This time, the leadership team he puts in place, will be sustainable," he said.
However, Bahl said there were very few similarities between both situations.
"It's unfortunate if someone is comparing Murthy's return similar to Steve Jobs as there's a fundamental difference between the two and their organizations. Jobs was a disruptive innovator!" the Forrester analyst said.