After coming under fire this year for receiving questionable payments, and after the company was criticized for its share buyback initiative, Infosys CEO Vishal Sikka resigned last week, leaving the company hunting for a new leader.
Reports in Reuters said shares in the company slid Monday (Aug. 21) by 5.4 percent, to their lowest level in more than three years. Infosys’ market value dropped by $5.2 billion.
Sikka resigned from the company after the technology services firm said in February that shareholder feedback was guiding its decision to make payments to Sikka and other executives at the company. In recent months, reports said there has also been a growing dispute between Infosys founders and its board of directors. A dispute with founders led Sikka to resign, reports said.
JPMorgan and other brokerages have downgraded the outlook on Infosys as a result, reports added.
V. Balakrishnan, former finance head at the company, told Reuters said that Sikka’s departure may not be the end of the company’s problems.
“Even if you get a new CEO, I don’t think that is going to solve the problem, because the core issues are governance issues,” he sad. “The board members should take responsibility – they have not handled issues well, they have clearly let down investors, the governance standards have clearly come down.”
Balakrishnan started a small business lending platform earlier this year, Billionloans, after exiting Infosys.
Reports also highlighted broader issues for the technology services space in India overall, with some U.S. companies fighting outsourcing to Indian firms and a push to hire locally.
“There is a real risk that … the force and ability with which the strategy gets executed will suffer at least near-term, a risk that Infosys can ill-afford in the current difficult climate for Indian IT,” said JPMorgan analyst Viju K. George.