April 11 (Bloomberg) -- Infosys Ltd., the third-worst performer this year on the S&P BSE Information Technology Index, said it has started to look for a successor to Chief Executive Officer S.D. Shibulal.
The nominations committee of the board of directors has hired Egon Zehnder, an executive search firm, to help identify external candidates for the job, the software-services provider said in an e-mailed statement today. This would be the first time Infosys is likely to have a CEO who isn’t a founder of the company based in Bengaluru, formerly known as Bangalore.
The stock has declined 7.2 percent this year, compared with an 11 percent gain for smaller rival HCL Technologies Ltd., as Infosys told investors in March that annual sales growth may be at the lower end of its projections and lag behind domestic industry forecast. N.R. Narayana Murthy, who returned as chairman in June, has shuffled top management to revive earnings after some executives including the company’s U.S. chief quit last year.
“It seems like a part of Murthy’s plan to restructure the company,” said Surya Narayan Nayak, Mumbai-based head of equity research at Sun Capital Advisory Services Pvt. “He is planning to reinvigorate the decision making process for higher growth and to win newer clients. Taking into account newer verticals like social media and cloud computing, a younger person would be able to bring in fresh ideas.”
Infosys rose 1.1 percent, the most since March 14, to 3,235.15 rupees at the close in Mumbai trading. The stock has slumped 15 percent since the end of February, compared with a 7.1 percent gain in the benchmark S&P BSE Sensex and a 4.9 percent drop at Tata Consultancy Services Ltd., India’s biggest software exporter.
Infosys shares underperformed during Shibulal’s tenure. They have risen 45 percent since August 2011 when Shibulal took charge as CEO compared with an 86 percent rally in the 10-company S&P BSE IT index, data compiled by Bloomberg show.
“Shibulal was due to retire in March 2015,” K.V. Kamath, lead independent director at Infosys, said in an e-mail. “As the last board meeting prior to his scheduled retirement date is on January 9, 2015, Shibu has offered to step down from the date of the last board meeting prior to his scheduled retirement or earlier if we were to complete the search and appointment process before that date. This is routine and I believe how successions happen.”
Infosys will also look for internal candidates to fill the position, according to the statement.
In January, the company had forecast sales to rise between 11.5 percent and 12 percent in the year ended March 31.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at email@example.com