Infosys: Whistle-blower allegations against CEO Parekh to fizzle out

Whistle-blowers trying to create confusion in market, say experts

INFOSYS-RESULTS/ [File] Infosys CEO Salil Parekh | Reuters

Even as Infosys stock dipped around 2 per cent on Wednesday, it is unlikely to remain in the red for long. Market experts feel that the second whistle-blower complaint against Infosys CEO Salil Parekh is aimed at tarnishing the image of him and the company, and lacks substantial basis.

“It is very clear that some petty mindset people are against Parekh and are not happy with his style of functioning. In a globalised world, it is hardly irrelevant whether the CEO works in India or abroad. In many of the IT services companies, CEOs work out of the US. At the end of the day, it is the performance of the CEO and the company that matters and not the location," said Kris Lakshmikanth, CEO and founder, Head Hunters India, an executive search firm.

As a matter of fact, majority of the Indian IT services companies have businesses and clients in the US and Europe. "Hence, the CEO needs to be there. Even if the CEO is located in any other city other than the headquarters of the firm, it just does not matter," Lakshmikanth opined. He added that besides tarnishing the image of the CEO, the whistle-blowers are trying to create confusion in the market so that the share prices fluctuate. "In a way it may be insider-trading tactics being used by the whistle-blowers,” he observed.

However, the distractions are momentary and is likely to fizzle out in the coming days, with Infosys shares continuing to remain attractive for buyers. The company has strong cash flows and has a strong cash reserve and it is doing well in the market.

In addition, every allegation has a cycle and does not necessarily mean that it will have a major impact on the CEO and the company, said Alok Shende of Mumbai-based Ascentius Consulting. “All these allegations will be short-lived. However, it is a fact that these whistle-blowers are losing credibility as the company itself had stated that they had no concrete evidence as far as forging of numbers was concerned. The Infosys practice of keeping the whistle-blower's identity a secret is encouraging more and more of people with trivial and petty mindset to level allegations. This should be contained,” remarked Shende.

More than often, the work location of a CEO or any other senior level employee is decided even before the individual joins an organisation. The latest allegation, hence, could be a sign that Parekh is strongly disliked by some Infosys employees. “Traveling by business class has hardly any relevance for a person of the CEO level as many executives in positions of vice president and above travel business class. For a large organisation such as Infosys whose turnover is in billion of dollars, such travel cost does not hold any ground. Moreover, Infosys as a corporate must be buying all the tickets in bulk as thousands of its employees travel the year-round and they must be getting these tickets at a fraction of the actual cost. All this is too small of a trivial issue. However, such kind of allegations should be addressed by the CEO as constant allegations are not good for the company and himself. Further allegations should be controlled,” felt B.S Murthy, CEO of Leadership Capital Consulting.