Corporate Governance at Infosys

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Case Details:

Case Code : CGOV001
Case Length : 12 Pages
Period : 1996 - 2001
Pub Date : 2001
Teaching Note : Available
Organization : Infosys Technologies Ltd.
Industry : Information Technology
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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“The fundamental objective of corporate governance is the enhancement of long-term shareholder value while, at the same time, protecting the interests of other stakeholders.”

- Kumar Mangalam Committee report on corporate governance, 1999.

“We've always striven hard for respectability, transparency and to create an ethical organisation. There are certain expectations that we haven't fulfilled. But we're also a very young organisation and in areas like track record of management, we may be low because we're yet to show longevity.”

- Narayana NR Murthy, Chairman and CEO, Infosys Technologies Limited (Infosys), 2001.

The High Priest of Corporate Governance

By the late 1990s, Infosys Technologies Limited (Infosys)¹ had clearly emerged one of the best managed companies in India. Its corporate governance practices seemed to be better than those of many other companies in India.

Because of its good governance practices, Infosys was the recipient of many awards. In 2001, Infosys was rated India's most respected company by Business World². Infosys was also ranked second in corporate governance among 495 emerging companies in a survey conducted by Credit Lyonnais Securities Asia (CLSA) Emerging Markets. It was voted India's best managed company five years in a row (1996-2000) by the Asiamoney poll.

Corporate Governance | Case Study in Management, Operations, Strategies, Corporate Governance, Case Studies

In 2000, Infosys had been awarded the “National Award for Excellence in Corporate Governance” by the Government of India. In 1999, Infosys had been selected as one of Asia's leading companies in the Far Eastern Economic Review's REVIEW 2000 Survey and voted India's most admired company by The Economic Times.

Infosys had also provided all the information required by the Cadbury committee³ Infosys had benchmarked its corporate governance practices against those of the best managed companies in the world (Refer Exhibit I for broad structures and processes for good governance).

It was one of the first companies in India to publish a compliance report on corporate governance, based on the recommendations of a committee constituted by the Confederation of Indian Industries (CII).⁴ Infosys maintained a high degree of transparency while disclosing information to stakeholders.

Excerpts >>

1] Infosys was one of India's largest and most famous software companies and provided a range of Information Technology (IT) consulting and software services to leading global organizations. Infosys was involved in customized software development, Internet Consulting, application development and offshore software services.

2] Businessworld, September 24, 2001.

3] The Cadbury Committee was set up in May 1991 in the United Kingdom. The stated objective of the committee was “to help raise the standards of corporate governance and the level of confidence in financial reporting and auditing by setting out clearly what it sees as the respective responsibilities of those involved and what it believes is expected of them.” The Cadbury Committee on corporate governance had made nineteen recommendations.

4] The Cadbury Committee was set up in May 1991 in the United Kingdom. The stated objective of the committee was “to help raise the standards of corporate governance and the level of confidence in financial reporting and auditing by setting out clearly what it sees as the respective responsibilities of those involved and what it believes is expected of them.” The Cadbury Committee on corporate governance had made nineteen recommendations.