Is Narayana Murthy 2.0 the answer to faltering Infosys 3.0?

As Infosys loses its sheen as India's technology icon, the company calls its founder and former Chairman N.R. Narayana Murthy to do what Steve Jobs did for Apple.

For the last several quarters, while Tata Consultancy Services, Cognizant Technologies, and HCL Technologies have been speeding ahead despite the global slowdown, Infosys has been missing its quarterly guidance and dropping behind.

The question is can Narayana Murthy really turn around the tide?

Numerous returning business leaders have done remarkably well. Steve Jobs return to Apple in 1997 is one of the best examples of success - he rescued the firm from near-collapse and made it the world's most successful tech company. Another successful comeback is Howard Schultz as the CEO of Starbucks, which has more than trebled the share price since his return in January 2008.

On the flip side, bringing back the chief executives doesn't always work. As Susan Adams from Forbes points out that, "Kenneth Lay's return to Enron was a resounding disaster. And Paul Allaire's return to Xerox in 2000, a year after he left, failed to stop the stock from plunging 60 percent in his second innings - which lasted barely 15 months". There are enough reasons to worry about second innings of business leaders. At the outset, their return is a clear signal and admission that the company is in deep trouble and company's current leadership needs help.

Is poor management the only reason for Infosys' lack luster performance in recent times or is it Infosys 3.0 strategy, or is it a bit of both?

The Infosys 3.0 strategy was to move Infosys higher up in the value chain of IT - into areas such as innovation, products & platforms, consulting, and greater value addition in business management. However, the strategy came at a time when global economy was going through a downturn and clients were focused on cost-cutting rather than on developing new business strategies.

Times have changed and things have evolved both internally and externally, with IT now a $100 billion industry as opposed to $22 billion back in 2006 when Narayana Murthy quit Infosys. Infosys' revenue at present is $7.4 billion from 800 clients as against $2.1 billion from around 500 clients in 2006. The company, at present, is facing one of the highest attrition rates at 16% in the industry and has a workforce of 1.6 lakh, against 50 thousand in 2006. Additionally, players such as Cognizant and HCL Technologies, which were relatively modest firms when Murthy hung up his boots, have left Infosys behind in the race.

To top it up, the top brass is abandoning the ship when it is being pounded by strong winds. Infosys BPO side of story is no different. Their problems have led to criticism of everything from their pricing strategy to what is considered a risk-averse culture, to their method of appointing CEOs and succession planning.

The company has many problems, some easier to solve than others. Infosys is suffering from lack of morale and a cohesive direction. Narayana Murthy is well placed to address both of these issues - he is a father figure for all at Infosys and he is a great visionary. Some of the others - Infosys brand equity and poor company performance - would need time to get things back on track. Infosys is sitting on a high cash reserve and has been extremely cautious in its inorganic growth strategy, and is yet to make a game-changing acquisition. This is another area which is long overdue and would need Murthy's immediate attention. Infosys' problems today are completely different from Murthy 1.0 era.

Now it is time to make the elephant dance. Infosys is at a strategic crossroad where it needs to decide whether to tweak Infosys 3.0 to make it work better and faster, or whether to rethink an entire new strategy. But we will have to wait to see if - Narayana Murthy 2.0 is the answer to faltering Infosys 3.0.

Dr. Pradeep K. Mukherji is the President and Managing Partner at Avasant APAC and Africa

This article was first published in www.GlobalServicesMedia.com