Vishal Sikka Resigns as Infosys CEO -- 3rd Update

By Eric Bellman Features Dow Jones Newswires

Vishal Sikka resigned Friday as chief executive of Infosys Ltd., citing a resistance to change at the company that deteriorated into anonymous mudslinging at India's second-largest software and outsourcing company.

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The Bangalore-based company said Mr. Sikka had the support of the board but had been harassed into leaving by Infosys founder N.R. Narayana Murthy, who it claims tried to slander Mr. Sikka in letters to the media.

"Mr. Murthy's continuous assault, including the latest letter, is the primary reason the CEO, Cr. Vishal Sikka, has resigned," Infosys said in a news release Friday. Mr. Murthy couldn't immediately be reached.

Mr. Sikka will stay on as executive vice chairman. Pravin Rao, a 30-year Infosys veteran, will become interim CEO and managing director while the company searches for a replacement.

Mr. Sikka was appointed in 2014 and was the first outsider ever to head the company. He was hired to transform the outsourcing giant from a company that competed on cost to a global technology brand powered by innovation.

He was scouted from German software company SAP SE to upgrade Infosys--a trailblazer of the outsourcing model and one of India's largest and most profitable companies.

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It has struggled to adjust to the latest technology trends--such as the cloud, automation and artificial intelligence--and has faced political headwinds as movements in the U.S. the U.K. have questioned the value of outsourcing.

The company was hoping that Mr. Sikka, known for leading and accelerating the launch of sophisticated software platforms at SAP, could make Infosys an industry trendsetter again.

Instead, it seems he faced unrelenting resistance that deteriorated into anonymous letters making claims against Mr. Sikka and others.

"The constant drumbeat of the same issues over and over again, while ignoring and undermining the good work that has been done, take the excitement and passion out of this amazing journey," he said in his resignation email to the board, which was released by the company.

The company didn't outline what the issues were.

Earlier this year, Infosys hired international law firm Gibson Dunn to investigate allegations of impropriety and governance issues ranging from how a couple of acquisitions were done to Mr. Sikka's compensation and travel expenses. Gibson Dunn found no evidence of wrongdoing.

Infosys shares were down nearly 9% in midday trading.

Debiprasad Nayak contributed to this article.

Write to Eric Bellman at eric.bellman@wsj.com

NEW DELHI-- Vishal Sikka resigned Friday as chief executive of Infosys Ltd., citing a resistance to change at the company that deteriorated into ugly accusations of impropriety at India's second-largest software and outsourcing company.

The Bangalore-based company said Mr. Sikka had the support of the board but had been harassed into leaving by Infosys founder N.R. Narayana Murthy, who it claims tried to slander Mr. Sikka in letters to the media.

"Mr. Murthy's continuous assault, including the latest letter, is the primary reason the CEO, Cr. Vishal Sikka, has resigned," Infosys said in a news release Friday.

Mr. Murthy said Friday that he has only been concerned about how the company he founded and left voluntarily in 2014 is managed, and hasn't being trying to get money or control out of Infosys.

"I am extremely anguished by the allegations, tone and tenor of the statements," he said in a statement released to local media. "My concern primarily was the deteriorating standard of corporate governance which I have repeatedly brought to the notice of the Infosys board."

Mr. Sikka said the battle was getting in the way of business and the morale.

"It is an untenable situation," he said a in a news conference in which he appeared through a video link from America. "I don't want to do this anymore."

Mr. Sikka will stay on as executive vice chairman. Pravin Rao, a 30-year Infosys veteran, will become interim CEO and managing director while the company searches for a replacement.

Mr. Sikka was appointed in 2014 and was the first outsider ever to head the company. He was hired to transform the outsourcing giant from a company that competed on cost to a global technology brand powered by innovation.

He was scouted from German software company SAP SE to upgrade Infosys--a trailblazer of the outsourcing model and one of India's largest and most profitable companies.

It has struggled to adjust to the latest technology trends--such as the cloud, automation and artificial intelligence--and has faced political headwinds as movements in the U.S. and the U.K. have questioned the value of outsourcing.

The company was hoping that Mr. Sikka, known for leading and accelerating the launch of sophisticated software platforms at SAP, could make Infosys an industry trendsetter again.

Instead, it seems he faced unrelenting resistance that deteriorated into anonymous letters making claims against Mr. Sikka and others.

"The constant drumbeat of the same issues over and over again, while ignoring and undermining the good work that has been done, take the excitement and passion out of this amazing journey," he said in his resignation email to the board, which was released by the company.

The company didn't outline what the issues were. Analysts said Mr. Sikka's attempts to rebrand and rebuild the company were causing concern and anger among some of the old-guard employees, management and even the company's founders who didn't approve of Mr. Sikka's free-spending ways that often depended on paying high salaries to attract outsiders.

"His plan was clashing with the old order," said Thomas George, senior vice president of CyberMedia Research. "There were forces like founders who were pulling the company in a different direction."

Some apparently resisted by spreading their suspicions, sometimes anonymously, about Mr. Sikka's spending.

Earlier this year, Infosys hired international law firm Gibson Dunn to investigate allegations of impropriety and governance issues ranging from how a couple of acquisitions were done to Mr. Sikka's compensation and travel expenses. Gibson Dunn found no evidence of wrongdoing.

What this all means for the outsourcing trailblazer remains to be seen and will depend on whether new blood at the top can quell the rebellion while continuing to move Infosys into more high-growth and high-margin businesses.

Infosys shares fell as much as 12% to a three-year low Friday.

Karan Deep Singh contributed to this article.

Write to Eric Bellman at eric.bellman@wsj.com

(END) Dow Jones Newswires

August 18, 2017 06:11 ET (10:11 GMT)