`Infosys should spin off low margin business’, says Pari Natarajan, CEO, Zinnov

NEW DELHI: At a time when technology services players are on the edge with rising protectionist cries and tightening visa norms in the US, the country’s second-largest player Infosys has been bogged down by governance challenges. In an e-mail interaction Pari Natarajan, co-founder & CEO, Zinnov, a research, consulting & advisory company, discusses why founders can’t let go and challenges before Infosys. Edited excerpts

Why aren’t founders in India able to build lasting institutions like GE, IBM, Apple, HP, Microsoft?
Largely because of the local market size. Most of these companies were built as the US market was large enough to absorb such innovations. As the India market grows, companies will be able to build innovative products that can create large enough market in India and then take it global.

Why can’t founders let go. Is it that founders want to control everything directly even after they hire a professional CEO?
For professional Chief Executive Officers (CEOs), running the company is often a job - managing investors, stakeholders and customers. For founders, it is usually the passion of solving problems in a specific way and with the specific culture and value system. VCs such as Andersson Horowitz (American venture capital firm) are moving into a model where they encourage the founders to be CEOs for a long period rather than hiring professional CEOs.

What do you believe are the challenges for Infosys?
I think the challenge is more about market than internal. Many of the assumptions based on which the company is built is not going to be valid in the future (low cost English speaking resources delivering low skilled technology work). The change to this model is incredibly hard.

What should Infosys do with the cash it has?
They should use it wisely to buy technology product and solutions companies in the US and spin off low margin businesses such as IMS.