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Nandan Nilekani Returns To Infosys As Non-Executive Chairman, Four Board Members Quit

Nandan Nilekani returns to lead Infosys within days of Vishal Sikka’s exit.

Nandan Nilekani poses for a photograph in New Delhi, India. (Photographer: Prashanth Vishwanathan/Bloomberg)
Nandan Nilekani poses for a photograph in New Delhi, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Nandan Nilekani returned to lead Infosys Ltd. as co-founders took control and pushed out four board members, capping months-long hostilities that led to Vishal Sikka’s exit as managing director and chief executive officer last week.

Nilekani is a co-founder of Infosys and has served in many leadership positions including as co-chairman of the company. He stepped down in July 2009 to set up a citizen identification number program - Aadhaar - for the government of India. On Thursday Nilekani returned to take over as a non-executive chairman and non-executive director of India’s second largest software services provider, according to the company’s exchange filing. The company’s co-chairman R Seshasayee, independent directors - Jeffrey S Lehman and John Etchemendy and Sikka resigned from the board. Ravi Venkatesan stepped down as co-chairman but will continue as an independent director. UB Pravin Rao will remain the interim CEO.

Nilekani said he was “happy to return” according to an Infosys media statement. “I thank Vishal for his service as the CEO of Infosys over the last 3 years and wish him well in his future endeavors.”

I am happy to return... and look forward to working with my colleagues on the board and in executive management on the business opportunities we see before us and delivering benefits to our clients, shareholders, employees and communities.
Nandan Nilekani, Non-Executive Chairman, Infosys

BloombergQuint had earlier reported that Nilekani may return to help the company navigate the current leadership crisis it is facing and that Venkatesan would stay on even as Seshasayee exits.

Thursday’s events bring back a founder on the board of Infosys after a gap of three years that coincided with Sikka’s term. Nilekani did not take sides publicly even as a spat raged for months between co-founder NR Narayana Murthy and the board over Sikka’s pay, acquisition of Israeli firm Panaya and severance pay for former Chief Financial Officer Rajiv Bansal as well as General Counsel David Kennedy. His return is expected to help broker peace between the board and the co-founders and allow the company to focus on business challenges ranging from automation to visa curbs in the U.S., the software exporter’s largest market.

Nilekani’s first priority is to get the board right. The second is to find an MD and CEO, whether it is an insider or an outsider, and then get succession planning back on the table.
V Balakrishnan, Former CFO, Infosys

Nilekani, who co-founded the information technology giant with Murthy and five others 36 years ago, hinted at a change in the way decisions are made. “The board will actively consider a broad-based shareholder consultation process as a critical part of its overall engagement initiatives with all the stakeholders of the company that are being taken up on a priority basis,” he said in the statement.

Infosys’ American Depository Receipts on Nasdaq rose as much as 1.5 percent after the company announced Nilekani’s appointment post market hours in India. The information technology bellwether’s stock had tumbled as much as 15 percent in just two trading sessions after Sikka’s exit even as the company announced a Rs 13,000-crore share buyback plan.

At least a dozen large institutional shareholders of Infosys on Wednesday urged the company's board to rope in Nilekani to restore confidence amid uncertainty stemming from Sikka’s exit.

Nilekani, who was the managing director and chief executive officer at Infosys from 2002 till 2007, enjoys the confidence of customers, shareholders and employees, they said in a letter to the board.

Nilekani was previously the co-chairman of the board of directors of Infosys, which he co-founded in 1981. He served as a director on the company’s board till July 2009 when he left Infosys to build out India’s Aadhaar programme and served as chairman of the Unique Identification Authority of India in the rank of a cabinet minister.

He quit the post in 2014 to contest the Lok Sabha election from South Bangalore but lost to a BJP candidate. Since then, he has continued to evangelise the use of technology and digital identification in government schemes.

‘Best Thing To Have Happened To Infosys’

Infosys had reached a stage where only someone like Nilekani can redeem both its image internally and externally, and “there couldn’t have been a better decision than this,” according to Anil Singhvi, founder of proxy advisory form Institutional Investor Advisory Services.

Nandan is the one person who will fix it. He knows how to fix it. It’s the best thing to have happened to Infosys.
Anil Singhvi, Founder, IiAS

Nilekani’s return will restore confidence among Infosys employees, shareholders and clients alike, he said.

‘Sending The Right Signals’

The appointment of Nilekani “sends out all the right signals,” said R Chandrasekhar, chairman of technology body NASSCOM. The reputation and abilities of the new non-executive chairman precede him and is the right kind of signal to counter all the question marks that have arisen on the company of late, he added.

The question is whether the leadership is one which infuses confidence in the market and the shareholders. I think that’s all that matters. 
R Chandrasekhar, Chairman, NASSCOM

'More Suited Than Most Of Us'

The information technology industry should be grateful to Nandan Nilekani for taking up the Infosys challenge at a time when the industry is going through a significant change, said Vineet Nayyar, executive vice chairman of Tech Mahindra, one of Infosys' peers.

“I think he is one of our great managers, who has done incredible work in Infosys”, Nayyar told BloombergQuint over the telephone.

I think he has all the qualities which are required to handle this task.
Vineet Nayyar, Executive Vice Chairman, Tech Mahindra

Nayyar added that Nilekani is “more suited than most of us” to take on the challenges that the IT sector is currently facing referring to a shift in business model from large outsourcing contracts to new age digital technology projects.