IT firm iGate sacks CEO over undisclosed relationship

Tue May 21, 2013 12:23pm EDT
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By Sumeet Chatterjee and Harichandan Arakali

MUMBAI/BANGALORE (Reuters) - IT outsourcing company iGate Corp sacked Chief Executive Phaneesh Murthy after a company sexual harassment investigation revealed that he had not disclosed a relationship with a subordinate.

Shares of the company fell 13 percent on the Nasdaq after the removal of Murthy, who led several initiatives to improve the company's performance such as charging clients for business results instead of man hours, the billing method more commonly used by IT outsourcing firms.

Murthy, one of the industry's best-known executives, was forced to quit India's second-biggest software services exporter Infosys Ltd in 2002, following a sexual harassment lawsuit, which was settled out of court.

Speaking to reporters after iGate announced his departure, Murthy said he had informed the company chairman about his relationship with the female employee a few weeks ago.

IGate said its investigation showed Murthy had violated company policy by failing to report his relationship with the employee. Murthy did not violate iGate's harassment policy, the company said in a statement.

"The board's decision was made as a result of an investigation by outside legal counsel, engaged by the board, of the facts and circumstances surrounding a relationship Mr Murthy had with a subordinate employee and a claim of sexual harassment," iGate said in a statement dated May 20.

A company spokesman did not respond to requests for further information. Murthy was replaced with immediate effect by interim CEO Gerhard Watzinger, the company said in the statement.

Fremont, California-based iGate and other smaller IT outsourcing services providers compete with Indian heavyweights such as Tata Consultancy Services, Wipro and Infosys on price to win market share.   Continued...

Phaneesh Murthy poses during the World Economic Forum (WEF) in Davos, January 26, 2013. REUTERS/Denis Balibouse