Why Narayana Murthy should hire a foreign CEO

Think back to 2011. Infosys was riding high, NR Narayana Murthy was executive chairman, Kris Gopalakrishnan was CEO and SD Shibulal was COO. Market observers fondly wondered whether NRN would appoint a foreign CEO in two or three years.

It's now three years since 2011, Infosys, by any definition, is not the company it was and its leadership is: NRN is executive chairman, Shibulal is CEO and the COO post is vacant.

This simple 2011-2014 comparison shows better than a flood of media stories how little corporate leadership has really changed in a company that needs desperately change at the top. It also adds heft to a suggestion ET has for Infy - Mr Murthy, now it's really time for you to hire a foreign CEO.

Our advice is based on four reasons.

First, the recent bump in Infosys's market cap and PE may be an NRN effect, but that doesn't address the company's leadership deficit. NRN having to come back in an executive role is the proof of the deficit. And several senior level exits are proof that the leadership deficit is beginning to extract high costs.

Second, global best practice on changing corporate leadership is to first, get a new, usually outside talent as CEO. All Infy CEOs have been founders till now. This is looking increasingly anomalous. A talented group of people can build a great company. But to retain greatness, the club that started full of zest but inevitably became cozy needs to be shaken up. A new CEO is supposed to lead future battles - that's why better-run companies often pick new, outside talent.

Third, one of Infosys's major perceptional - and real - problems is that its leadership is too full of Indians. Cognizant, which has become what Infy used to be earlier, has far greater foreign representation at both senior management and board levels. To jump start the process of competing better with the likes of Cognizant, Infosys should hire a foreign CEO. That would be a fairly dramatic way to start signaling that it understands the importance of a globally inclusive senior talent pool. Infy needs better talent in US and Europe operations and a foreign CEO will impress both customers and potential key recruitees.

Fourth, and perhaps most important, Infosys has a "son problem". Rohan Murthy's future plans exercise many minds in Infy and to a much greater degree than the company leadership may wish to believe. Having NRN's son around when a NRN-led old guard is running the company just creates more medium term uncertainty. A foreign CEO will kill that uncertainty - because Infy giving leadership to a non-founding, non-Indian executive will become the dominant narrative.

So, look West, Mr Murthy.