Infosys says V Balakrishnan resigns

MUMBAI Sat Dec 21, 2013 3:40am IST

V. Balakrishnan speaks during Reuters India Investment Summit in Bangalore November 25, 2009. REUTERS/Stringer/Files

V. Balakrishnan speaks during Reuters India Investment Summit in Bangalore November 25, 2009.

Credit: Reuters/Stringer/Files

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MUMBAI (Reuters) - A top executive at Infosys (INFY.NS) who was seen as a candidate to become the next chief executive, has resigned, the latest such departure since co-founder Narayana Murthy returned as executive chairman.

Infosys said on Friday that V. Balakrishnan, the head of several units including business process outsourcing, has resigned and would leave at the end of the month.

Balakrishnan, widely tipped by analysts to become chief executive at India's second-biggest software services exporter, told TV channel ET Now that his decision to resign was not sudden and he wanted to pursue other interests, including potentially in private equity.

The departure sparked concern among some analysts of management disarray in a company, which brought back founder and former chairman Murthy in June after disappointing results and a loss of market share.

"This exit is in line with the several senior-level departures seen in the firm, which indicates that senior leaders do not see a clear strategic direction, and that the firm struggles to find its feet in terms of what it wants to do in strategy," said Ankur Rudra, an analyst with Ambit Capital in Mumbai.

"The negative impact of every senior level departure is an avalanche, which snowballs into several mid-management executives finding it difficult to stay in the firm."

Murthy's return has been applauded by investors, with the share price rising about 50 percent so far this year to a record high, as its profit outlook is expected to improve on the back of stronger global demand and a weak rupee.

However, Murthy's return has also been followed by the departure of several executives, including its Americas head and global manufacturing chief, Ashok Vemuri.

Balakrishnan has the highest profile among those to leave, having previously served as chief financial officer and heading key units at the company, including consultancy Infosys Lodestone.

Analysts were uncertain about the reasons behind the of departures, but said it was bound to worry investors.

Since his return Murthy has repeatedly said he will take tough decisions to restore the company's fortunes over the next three years and refocus it on winning large outsourcing contracts.

"Given the management changes at the beginning of the year we did expect some changes at the top level. Some exits surprised and some did not. We need to watch the company a little more closely as having seen a fairly good number of people already leaving," said IV Subramaniam, chief investment officer at Quantum Asset Management, which holds about $1.7 million worth of Infosys stock.

"Infosys has always focused on creating a strong pipleline of leaders. This allows us to deliver on our clients and business commitments without any disruption," said a spokeswoman for the company.

(Editing by Rafael Nam and Greg Mahlich)

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