Sep 18, 2017

Infosys: A Story of Cultural Differences

Pallavi Mody

The conflict between founding patriarch Narayana Murthy (NRN) and the first non-founder CEO Vishal Sikka has led to Infosys and the country being in an embarrassing situation. How does one explain such an awkward state of affairs? Differences in Mindset and Cross-Cultural issues explain the Infosys saga. This article attempts to explain it within internationally acclaimed frameworks.

The dictionary defines Mindset as, ‘a fixed mental attitude or disposition that predetermines a person’s responses to and interpretations of situations’. Needless to say NRN and Sikka belonged to two very different mindsets. NRN represented the middle class, conservative and Spartan mindset whereas Sikka showed traits of millennials- spontaneous, flambouyant and risk-taking. No wonder, NRN objected to exorbitant bills of charter flights and the severance package of ₹ 17 crore to Rajiv Bansal.

Prof. Hofstede, a Dutch social psychologist is considered an authority in explaining the Cross-Cultural differences. He has conducted one of the most comprehensive studies, covering 99 countries, of how values in the workplace are influenced by culture. His most popular books, Cultures and Organizations and Software of the Mind, have been translated into 20 different languages.

Prof. Hofstede defines culture as “the collective programming of the mind distinguishing the members of one group of people from others”. His model of national culture consists of six dimensions; Power Distance, Individualism, Masculinity, Uncertainty Avoidance, Long Term Orientation and Indulgence.

The current conflict at Infosys can be explained by the cultural differences. Sikka embodies American culture. He migrated in his early twenties to US. He did his graduation, post-graduation and doctorate from the US university system and became a citizen of US. NRN on the other hand represents Indian culture.

Applying Hofstede’s cultural dimensions to compare US with India, one finds significant differences in the scores on three dimensions; power distance US (40) India (77), Individualism US (91) India (48) and Indulgence US (68) India (26). What does this mean?

A high score of power distance, as in India, (77) indicates that society is hierarchical and there is unequal distribution of power. Family patriarchs/matriarchs rule till their death; is a common practice that is accepted in India. The jJob of a typical head is of preserving values, traditions and the name of the family or the business. Did we hear the words, ‘good corporate governance, transparency, fairness and accountability’ coming out as the main concerns from NRN? Is NRN still trying to exert power?

Undoubtedly, NRN and the founding team have created the iconic Indian brand, Infosys, from scratch. Established in 1981, Infosys is a NYSE listed global consulting and IT services company with more than 198,000 employees. From a capital of $250, the company has grown to become a $10.4 billion company with a market capitalization of approximately $34.5 billion. Infosys pioneered the Global Delivery Model and became the first IT Company from India to be listed on NASDAQ. The employee stock options program of Infosys created some of India’s first salaried millionaires.

A high score on Individualism, as in US (91) indicates that it is a society of individuals who think in terms of ‘I, Me and Myself’. People lack interpersonal connection and value personal freedom and privacy. On the other hand, a low score on Individualism, as in India (48) indicates that there is strong group cohesion. There exists large amount of loyalty and respect for members of the group, as was evident among team Infosys. People in India would show respect for age and wisdom and would not mind suppressing feelings to work in harmony. Sikka’s irritation over the repeated allegations was quite evident in his skype communication to the board of Infosys and media as he tendered his resignation. Didn’t the board deserve a personal visit by Sikka even if he signs off?

A low score on indulgence, as in India (26) indicates a restrained behavior. Frugality is a virtue. Infosys was rewarded for its team’s perseverance, loyalty, commitment and restraint. Extravagant, boisterous and indulgent Sikka was frowned upon. Is there a trait of extravagance in his decision to acquire loss making firm from Israel named Panaya for $200 million?

Vishal Sikka’s appointment as CEO in 2014 was a response to a strategic decision. Infosys was looking for a change. As the model of labour arbitrage was getting exhausted, Infosys needed to rediscover itself. Sikka was brought in to drive innovation, information management based on artificial intelligence and transform the company.

Three years down the line, there was growing realization on both sides. They were in a conundrum called mismatch of cultures. With Nandan Nilkeni returning as Non-Executive Chairman, the bridge between the investors, founders and board has been built. Nandan would bring the continuity of culture and values that have been at the core of Infosys. After the board gets reconstituted, the next job is to find a suitable new CEO.

Is it difficult to find a CEO who can lead tomorrow’s Infosys by maintaining Indian ethos? If the largest technology companies of the world-Google and Microsoft are led by the Indians, rooted in Indian culture, it may not be difficult to find a good culture fit for Infosys.

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