Infy’s revenue guidance may be hit: analysts

The Infosys board has driven itself to a cul-de-sac after releasing a letter accusing former chairman and co-founder NR Narayana Murthy of going after the management with malicious intentions. One major fallout of the situation could be scaling down of the revenue guidance during the coming quarter, IT analyst Prabal Basu Roy told BusinessLine .

Soon after the announcement of Vishal Sikka’s resignation, Infosys shares tanked and went down further when the management released a letter holding Murthy responsible for damaging the fabric of the company, corporate governance firm and advisory research, InGovern’s Shriram Subramanian told BusinessLine .

“The business will surely go down but there will always be an excuse that environment is not conducive enough,” he said.

Stating that the situation at Infosys was very grave, Subramanian said it was unlikely that either chairmen or both will would resign as they would then be open to getting implied to various charges. “The board has not given itself a face-saving measure. They will need a mediator to resolve the issues. It is pure brinkmanship now,” he said.

It is unlikely that Murthy will back down in spite of the letter from the board and might seek a closure on the several issues he has raised. “The board has to answer these issues fair and square if they want a proper closure,” he pointed out.

Meanwhile, some of the employees, this newspaper talked to, said there is a large section of them who want the founders back if only to stabilise the situation. “Everyone was shocked by the letter which made various allegations against Murthy. It is now a point of no return,” said a senior executive who did not want to be named.

But there were others who believe Sikka should not have been meted out this treatment. “Questions about the Panaya deal remain and especially its high valuation,” the senior executive said.

Prabal Basu Roy said getting someone as good or better than Sikka will be difficult as they would not like to work with their hands tied. “There is no question about the roll back of the strategy because there is no other strategy except the one unveiled by Sikka. He did a splendid job,” said Basu Roy who has worked with Lucent Tech and Polaris Software.

He said it will take another six to nine months before anyone can be recruited for the CEO’s post. “They are under pressure to recruit someone from inside. But there is a possibility of getting someone externally,” he said.

But then, competitors might take away some of the business though co-chairman, Ravi Venkatesan and vice-chairman, Vishal Sikka have made it clear they will hit the road soon and visit several cities across the globe to ensure that the clients’ confidence in the company does not go down.