Vishal Sikka was shackled from Day 1, Infosys turnaround to be hit: D-Street reacts

Vishal Sikka’s resignation as CEO and MD of Infosys on Friday morning came as a surprise not just for the Indian IT industry, but also the corporate world in general and the stock market.

Sikka was named executive vice-chairman of Infosys with an annual salary of $1.

Reacting on the development, the Infosys stock cracked over 6 per cent in early trade, which pulled down the BSE IT index by 2.12 per cent to 10,229.

“After much reflection, I have concluded that it is indeed time for me to leave my current positions as MD and CEO,” Sikka said in his resignation letter.

“I now need to move forward, and return to an environment of respect, trust and empowerment, where I can take on new lofty challenges, as can each of you,” he said.

Also read: Separation blues: Vishal Sikka updates Twitter bio, posts e-mail on personal blog

In his blog, Sikka said, “For days, indeed weeks, this decision has weighed on me. I have wrestled the pros and cons, the issues and the counterbalancing arguments. But now, after much thought, and considering the environment of the last few quarters, I am clear in my decision. It is clear to me that despite our successes over the last three years, and the powerful seeds of innovation that we have sown, I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks.”

Market veterans and analysts reacted to the development with shock and surprise.

Nomura
Vishal Sikka resigning as CEO is a negative for the company. Turnaround hopes in company will see a pushback. Pravin Rao’s appointment as Interim-MD at best a stop-gap arrangement.

Nilesh Shah, MD, Kotak AMC
Sikka's resignation raises issue of relation between promoters and professional. Infosys leadership needs to work to get back their 'mojo'. The IT major has created a solid foundation and talent is available in the market. Need clear communication on roadmap for transition.

R Chandrashekhar, President, NASSCOM
This is a very major development as far as Infosys is concerned one which would have a significant impact, it is extremely important this leadership question in this iconic company of the IT industry of India is settled as quickly as possible. And I have no doubt that it has all the capabilities that are required, both in terms of the employees as well as in terms of the senior members of the board and the founders. It has all that it takes to make the transition but I think the settlement of this question at the earliest is certainly a major imperative and it is important to send out the right signals to the rest of the industry as well to the global markets as well.

V K Sharma, Head - PCG, HDFC securities
Sikka’s exit draws a long drawn out board room battle to a close. While the Company did better than the industry during Sikka’s tenure, it was no where near achieving Sikka’s own $20 billion target by 2020. The forthcoming buy back may belay the stock from falling more.

Sikka’s allegation that he was continuously being distracted does not wash as he had long enough a honey moon period to make his mark. In the IT space , we like a smaller company, Persistent Systems more as it is has business portfolio that is relevant to the times , which is SMAC - Social, Media, Analytics and Cloud.

Harsh Goenka Chairman, RPG Enterprises

Vishal Sikka is a world-class global leader. Unfortunately, he could not align well with earlier promoters and founders.

Mahesh Singhi, Founder & MD, Singhi Advisors

This resignation is just a succession plan for him post the company transformation since he took over. This also seems as the direct move to me at a time when the company has been battling against time to get back on the growth path, as an embattled board and management face questions on poor corporate governance from some of the company’s founders, led by NR Narayana Murthy.

Sandip Sabharwal, Investment Adviser, Asksandipsabharwal. com
Vishal Sikka takes the right move. There is only so much he could take from Narayana Murthy & Company. Was shackled from day one.

Chitra Narayanan, Senior Journalist
Working for a promoter-driven company is always a high-risk proposition for CEOs.