Corporate Governance in the Indian IT Sector- Trends and Implications

Corporate governance is basically the system by which business corporations are directed and controlled. The structure of corporate governance specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and spells out the rules and procedures for making decisions on corporate affairs. Corporate governance guidelines are essentially policies that are put in place, to facilitate seamless operations of an organization vis-à-vis factors like compliance with law, allocation and distribution of roles and responsibilities, inhibiting concentration of powers in a few hands or abuse of power, etc. In India, the Securities and Exchange Board of India (SEBI) appointed a committee under the Chairmanship of Kumar Mangalam Birla to recommend a code of corporate governance. The report was submitted by the committee in November 1999 and accepted by SEBI in December 1999. Listed companies were asked to comply with the guidelines by 2001. Infosys was one of the early adopters and had accepted the recommendation of both CII & SEBI. Through this rigour, the company was able to manage its company affairs, much better than its peers. As a result, the company had received many awards and recognitions for its corporate governance endeavour. However, since the late 2016, the company has been slipping on various corporate governance issues. A huge fracas between the founding members and the management, and the developments thereafter, had led to a lot of speculation on the company’s own corporate governance standards. Through this paper, we wish to discuss the concept of corporate governance, its utility for corporates, the genesis in India, early mover - Infosys and the misses on this front the company has reported of late.

I want Infosys to be a company which is globally respected and where people belonging to different nationalities, races and religious beliefs will work with intense competition but utmost courtesy, dignity and co-operation in adding greater value to our stakeholders day after day.- N.R. Narayana Murthy