By Gulab Chand | AFP
Infosys (NYSE: INFY - news) on Saturday reappointed co-founder N.R. Narayana Murthy to lead the Indian outsourcing giant two years after he retired, as the company grapples with weak earnings and falling market share.
The global software group announced that incumbent K.V. Kamath will step down as chairman of the board and be an independent director.
"This calling was sudden, unexpected, and most unusual," Murthy, who has been named executive chairman, said.
"But, then, Infosys is my middle child. Therefore, I have put aside my plans-in-progress and accepted this responsibility," he said.
Three decades ago, Murthy and six other Indian software pioneers sat around a kitchen table and created Infosys.
Murthy's return comes after the company, India's second-largest software outsourcer by revenue, in April announced disappointing fourth-quarter earnings and weak revenue projections.
Murthy appealed to shareholders to be "optimists" and told a news conference "we have overcome tougher and bigger challenges before".
He said "the need of the day" was to "take quick, tough and firm decisions".
He said he had decided to put his retirement on hold given his "parental attachment to the company" after being approached a few weeks ago by Kamath to return to the helm.
Infosys, which is also listed on New York's Nasdaq, has been seeking to turn itself around with a strategic overhaul to focus on higher value software and consulting services instead of labour-intensive outsourcing operations.
Murthy's son, Rohan Murthy, who holds a Harvard computer science doctorate, will serve as his executive assistant.
Murthy had earlier insisted that "no family member of the Infosys founders" would ever be part of the company.
There was no immediate reason given for the change of heart but Kamath said Murthy's son was "well qualified" for the job.
The appointments will be submitted to shareholders for approval at the company's annual general meeting on June 15, Infosys said.
Murthy retired as executive chairman in August 2011 after turning 65 and Kamath assumed the post as non-executive chairman with co-founder Krish Gopalakrishnan as co-chairman.
Murthy was named chairman emeritus on his retirement.
S. D. Shibulal will continue as the chief executive and managing director of the company.
S. Gopalakrishnan will be reappointed executive vice-chairman and will focus on client relationships and industry issues.
Murthy and his son as well as Gopalakrishnan and Shibulal have each asked to be paid a token one rupee (two cents) a year.
The decision to bring Murthy back into active service was taken by the board at a meeting on Saturday.
Kamath welcomed Murthy's reappointment saying that his entrepreneurial and leadership record as well as his experience as a technology pioneer "makes him eminently qualified to lead the company and provide strategic direction at this point in time".
Kamath, former chief executive of India's top private bank ICICI, said the board had taken the step "keeping in mind the challenges that the technology industry" faces.
He said shareholders had asked for a "strengthening of the executive leadership during this challenging time".
Infosys, whose earnings have traditionally been seen as a bellwether for the sector, reported net profit rose just 3.4 percent to 23.94 billion rupees ($439 million) for the final quarter to March.
Its expectation that revenues would grow by just six to 10 percent in the current financial year was significantly below the 12 to 14 percent forecast by the National Association of Software (Xetra: 330400 - news) and Services Companies (NASSCOM).
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.
In the past year, Infosys has missed sales targets, lost market share and seen its stock price slide as US revenues decline.
A quarter of the company's revenue comes from Europe, and in recent years the firm has shifted focus to emerging and new markets such as Singapore, Brazil, Mexico and eastern Europe.
India, with its large English-speaking workforce, accounts for at least 50 percent of the global outsourcing market and the industry is a vital exporter.