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July 24, 2002 | 1445 IST
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Phaneesh shocked; Infosys sees no impact on business

Kamla Bhatt in Santa Clara, CA

Infosys Technologies made the news twice over this month. First a recession-busting quarter with 14 per cent reported
revenue growth. And now, for what may be an all-time first for the desi digerati in the Silicon Valley - a sexual harassment case, tainting one of its favorite poster boys.

Phaneesh MurthyFor Phaneesh Murthy, 38, is no ordinary poster boy for the Indian high tech community - he actually defined it. As a pioneer of the Indian software giant Infosys' first stumbling steps into the US software outsourcing market, Phaneesh rode an unbroken upward sales curve for the last decade.

Most recently, he capped his long, successful innings with the company by being appointed as the CEO of Progeon, an Infosys business process spin-off in Fremont, CA.

It was in Fremont CA on Tuesday that news of a sexual harassment lawsuit against Phaneesh surfaced and registered a Richter 7 for even the success-bored Indian community in the Valley.

For a community that has "arrived in America" in many ways…. success in the high-tech industry, pain in the dotbust collapse this is another, less welcome milestone - the first high-profile sexual harassment lawsuit against a Bangalore-based software giant.

While details of the lawsuit continue to remain sketchy and the plaintiff's name has been kept private, a few facts emerge - that Phaneesh has resigned from Infosys; that the suit has been filed against him and Infosys; and that the plaintiff is a female ex-employee was laid off a year ago.

Besides that little has emerged to indicate the specific nature of the charges. And until proven otherwise, one has little to go by except Phaneesh's sterling track record as a professional.

Phaneesh's abruptly resigned from Infosys July 23, and attempts to reach him on his cellphone drew a voice mail from happier times "Hi, this is Phaneesh…." His assistant Jessica dutifully read her script: "He had a long, planned vacation till August 2 and has gone with his family." She would not disclose where he was vacationing, and if there was a lawyer that we could reach for comments.

Phaneesh troubles even made Reuters, which quoted him as having denied the charges filed by an unidentified US national, who left the company more than a year ago, and said both the company and he would defend themselves.

"I believe the charges are unfounded. Obviously, I am mentally disturbed and distracted that false charges can be brought against me," he is quoted as saying by Reuters. The 38-year-old said the lawsuit has been filed in California and came out of the blue. "I am completely disturbed and shocked," he added.

This correspondent spoke with P R Ganapathy (with a now appropriate sounding nickname 'Guns'), in-charge of investor relations and head of administration at the Fremont office, from Phaneesh operated.

Ganapathy was calm, but tired, after a morning of spin and had this to say: "About a month ago, we were served a notice about unlawful termination and sexual harassment. The defendants named were Phaneesh Murthy and Infosys. Our lawyers are Wilson Sonsini Goodrich and Rosati (the famous Palo Alto-based law firm), who are looking into the case. We are not revealing the name of the plaintiff because of the privacy issue. We are not revealing where the case has been filed either."

"The company has a well-documented policy against sexual harassment. We have a grievance council and headed by a well-known lawyer. This was the first case filed against Infosys. This was a surprise."

"We have instructed our counsel to take vigorous defense. Phaneesh has been personally named in the case and is preparing to defend. We are respecting Phaneesh's privacy and he's spending quality time with his family. He resigned effective July 23."

And in response to other questions, 'Guns' responded via e-mail:

Why did you wait for a month after the notice was served to you?

We cannot be rushed. We looked at various things, and Phaneesh decided to resign.

Is this the first time that a sexual harassment case been filed against Infosys and one its employees?


You mentioned the company has a well-documented policy on sexual harassment and has a grievance council. Could you spell out the policy and procedure? Was this procedure followed in this instance? Did this particular case go before the grievance council? If not, why not? If yes, what was the outcome?

The Infosys anti-sexual harassment policy has the following elements:

  • Explaining what constitutes sexual harassment;
  • Action an employee can take if he / she feels that he / she has been harassed;
  • A grievance resolution body, chaired by Prof Pooja Kaushik of the National Law School;
  • Procedure to be followed by the GRB in the event of a complaint, et cetera.

In spite of the policy, how is it then that the case came as a total surprise?

We can answer this after we complete a detailed investigation. At this stage, it seems like the concerned employee did not avail of this procedure.

What impact will this have on Infosys's brand name/image and earnings?

We do not anticipate any impact on Infosys brand image / earnings at this point.

What steps has the company taken to address this issue with its employees?

The company has communicated this in an internal e-mail to all employees. We are reviewing our anti-sexual harassment policy to see if there is any need to tighten up this policy and also increasing communication of the policy.

What steps has the company taken to do damage control vis-à-vis its clients?

The company has proactively communicated with all its clients, introducing Basab Pradhan (who has taken over part of Phaneesh Murthy's portfolio) to them - most of them already know him well - and reassuring them of the highest customer service and attention.

How many people have been laid off from Infosys this past quarter in the US, and the CA office in particular?

Nobody has been laid off.

Could you let me know if this case came before the grievance council? You mentioned that the case is under review by this council, and that after a while you will know the findings? Can you clarify?

No, this case did not come before the grievance council. However, since a case has been filed, Infosys will conduct a thorough investigation into the facts and we might then know why the procedure was not used.

May I ask why the case did not come before the grievance council? Or, was it communicated to the upper management through e-mails or letters by the person who filed the case?

No, the person who filed the case did not communicate this to any higher up in any fashion and did not represent the issue to the grievance council. We will have to find out, from the detailed investigation that we will do, why he / she did not use the grievance redressal procedure.

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