MUMBAI: Shares of Infosys jumped yesterday as investors cheered the return of founder N R Narayana Murthy to boost the Indian outsourcing giant’s sagging fortunes, but analysts questioned his chances of success.
On Saturday Infosys recalled its co-founder and former chairman Murthy to take the reins, almost two years after he retired in August 2011 on turning 65. Infosys shares closed up more than 4.4 percent at 2,513.95 rupees after soaring in early trade by over nine percent in response to the news.
Murthy is returning as executive chairman to Infosys, India’s second-largest software outsourcer by revenue, at a time when it is struggling with weak earnings, loss of market share and waning employee morale.
“It would be too simplistic to assume that Murthy has a magic wand to turn things around,” said Ajay Bodke, head of investment strategy at Mumbai’s Prabhudas Lilladher brokerage. But he said that Murthy’s “deep relationships” in the global corporate world would help Infosys.
Three decades ago, Murthy, who has an iconic stature in Indian business as a pioneer of the country’s flagship outsourcing industry, and six others sat around a kitchen table and created Infosys.
Murthy, after his reappointment, described Infosys as his “middle child” and said that was why he had accepted the request by the company to return.
Since Murthy’s exit in 2011, India’s IT industry has seen a change in the business environment with a focus on new growth areas of cloud computing and consultancy.
The Bangalore-based Infosys, also listed on New York’s Nasdaq, has been seeking to reinvent itself to focus on higher-value software and consulting services instead of labour-intensive outsourcing services. Many of India’s IT outsourcing firms have been going through a rough patch, and they say the outlook for the industry remains difficult due to uncertainty in key US and European markets.
But Infosys has been conservative and strict in its approach in scouting for big deals, often losing out to rivals which have focused on volume growth. “Murthy will want to put his stamp, demonstrate that the leadership is different,” said Sonam Udasi, head of research at IDBI Capital.
AFP
