Indian corporate governance is in transition

India’s corporate sector will have to be aware of the challenges of adapting to global standard governance as the structure changes from family-backed operations to professional managers, says Girija Pande, chairman of Singapore-based Apex Avalon Consultancy.

“It is a challenge to everyone as India moves on,” noted Pande, who is also a former chairman of Tata Consultancy Services (TCS) covering the Asia Pacific countries.

“In fact, Corporate Governance in India is undergoing a transition on its way to become a global market with participation from multi-national corporations (MNCs),” Pande pointed out while commenting on corporate Governance turmoil seen in recent weeks at Infosys, an IT icon in India.

The Indian IT industry generally have followed a high corporate governance standard and they wanted to be known for transparency globally.

But this image has taken a beating due to the abrupt departure of Infosys chief executive officer Dr Vishal Sikka following differences in management style with Infosys’ founder Narayanan Murthy, he pointed out.

“Infosys is a very fine institution, built over the decades by the founder,” he noted.

But as India transition from family-backed structure to having outside professional managers, especially with the “very Western background, the people on both sides have to be aware of the challenges that they are going to face in cultural adaptation”, stressed Pande who is also adviser to Foreign Investors on India (fii-news.com).

“It is a transition time for the Indian IT industry. It is moving from cost-based delivery system to innovation-based system. The IT structure is changing and transforming. It is a sensitive time for Infosys too,” Pande underlined.

He also felt that it was case of not having groomed a chief executive by the outgoing chief. “The contrast with smooth succession at TCS is stark,” observed Pande.

The Board of Infosys will need to find a solution to these differences in management culture before they can select any external candidate as CEO, he said. fii-news.com