MUMBAI May 29 India's second largest IT
services exporter Infosys Ltd is under pressure to
bring in a new chief executive soon to check an exodus of junior
staff and reassure investors after a slew of departures at the
Shares in Infosys, the most widely held Indian stock, fell
to their lowest level in nine months on Thursday, the day after
it announced president and board member B.G. Srinivas had
The departure of Srinivas, the 10th senior executive to exit
in the last year, widens a leadership vacuum at Infosys as it
searches for a new chief executive. It also increases the chance
the company will break with tradition and hire an outsider for
the job, analysts said.
Srinivas was widely seen as a frontrunner for the top job
among internal candidates after Chief Executive S.D. Shibulal,
one of company's seven founders, said in April that he wants to
retire by January 2015 at the latest.
"With his (Srinivas') resignation, the impression is quite
clear that the company is going to get an outsider for the job,"
RK Gupta, managing director of Taurus Asset Management, which
owns Infosys shares, told Reuters.
"With a large organisation like Infosys you need new blood.
Old guards sometimes have a sense of lethargy."
A decision on the new CEO is likely to be made earlier than
expected, possibly during the July-September quarter, said two
people with knowledge of the matter. The sources declined to be
named as the selection process is confidential.
Infosys did not reply to a Reuters email seeking comment.
The company, which has been losing market shares to its
rivals Tata Consultancy Services Ltd and Cognizant
Technology Solutions Corp, did not give a reason for
Srinivas' resignation in a stock exchange filing.
Srinivas' resignation follows the departure of at least nine
senior executives who left since the company brought founder
N.R. Narayana Murthy back from retirement to help revive its
fortunes in June last year..
Infosys was once a star performer in India's more than $100
billion outsourcing sector, but the uncertainty at the top and
its shrinking market share have dimmed its status as the
employer of choice for young IT workers, with staff leaving at
an unprecedented pace.
Analysts said the company would benefit from swiftly
appointing a new CEO.
"They should announce the next CEO in one or two months to
bring some stability and boost investor confidence," said
Sanjeev Hota, assistant vice president of institutional equities
at brokers Sharekhan.
Infosys shares were trading down 7.2 percent at 0728 GMT,
underperforming the main Mumbai market index which was
down 0.7 percent and the IT sector index, which was
trading 2.8 percent lower. The stock is down nearly 16 percent
so far this year.
Some analysts said the stock was likely to remain under
pressure until the new CEO proved themselves capable of turning
In a research report published on Thursday, Barclays
analysts Bhuvnesh Singh and Hitesh Das said the CEO selection
process may lead to "further management churn".
"We believe that the probability of an external candidate
may indicate that the company's problems are more deep seated
than earlier thought and that an external person is required to
bring significant changes within the organization," they wrote.
(Editing by Miral Fahmy)