Infosys CEO Vishal Sikka resigns; shares fall by 8%

The chief exec post held by Infosys' Vishal Sikka (above) will be filled by Mr Pravin Rao, the interim MD and CEO.
The chief exec post held by Infosys' Vishal Sikka (above) will be filled by Mr Pravin Rao, the interim MD and CEO.
The chief exec post held by Infosys' Vishal Sikka will be filled by Mr Pravin Rao (above), the interim MD and CEO.
The chief exec post held by Infosys' Vishal Sikka will be filled by Mr Pravin Rao (above), the interim MD and CEO.

MUMBAI • Infosys, in a surprise announcement, said Mr Vishal Sikka has resigned as chief executive, citing a stream of distractions and disruptions in recent months, pushing down shares of the second-largest Indian IT services firm almost 8 per cent yesterday.

Mr Pravin Rao, Infosys' chief operating officer, was named interim managing director and CEO.

Mr Rao will report to Mr Sikka, who will take on the executive vice-chairman role until a permanent CEO takes charge, which should be no later than end-March next year, Infosys said.

The move comes after a protracted war of words between Infosys and its founders and some former executives, who were unhappy with various decisions taken by the board.

The founders, who still own 12.75 per cent of Infosys, have in the past questioned a pay rise granted to Mr Sikka and Mr Rao, as well as the size of severance payouts given to others, including the company's former finance head Rajiv Bansal.

In his resignation letter, Mr Sikka said: "Over the last many months and quarters, we have all been besieged by false, baseless, malicious and increasingly personal attacks.

"This continuous drumbeat of distractions and negativity... inhibits our ability to make positive changes and stay focused on value creation."

A former member of the executive board at German software firm SAP, Mr Sikka took the top job at Infosys in 2014, becoming the first CEO of the company who was not also one of its founders.

A professional manager with a charismatic manner, he was known for frequently wearing black t-shirts and a blazer, in contrast to his peers in suits.

Infosys shares fell as much as 7.6 per cent to a more than one-month low of 943 rupees.

HDFC Securities analyst Apurva Prasad said: "There is some level of uncertainty as we wait till the new CEO and managing director comes in, and it does put the company in some form of uncertainty in terms of strategy." He added that the stock reaction was more to do with uncertainty.

Sikka's resignation comes at a time when Infosys, like others in the more than US$150 billion (S$205 billion) Indian IT services industry, is battling a slowdown in new deals from western clients and bracing itself for changes to visa rules in the United States, its top market, that could hike costs and dent profits.

Infosys is likely to struggle to reach its ambitious US$20 billion revenue target by 2020 in what Mr Sikka has previously described as a "challenging environment out there".

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 19, 2017, with the headline 'Infosys CEO Vishal Sikka resigns; shares fall by 8%'. Print Edition | Subscribe