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MUMBAI (Reuters) - Outsourcing company iGate Corp said it had sacked its Chief Executive Phaneesh Murthy for not disclosing a relationship with a subordinate after investigating one of India's best-known IT executives for sexual harassment.
Murthy was replaced with immediate effect by interim CEO Gerhard Watzinger, iGate said. Murthy was forced to quit India's second biggest software exporter Infosys Ltd in 2002 following a sexual harassment lawsuit, which was settled out of court.
Murthy did not respond to repeated telephone calls by Reuters seeking comment. iGate and other smaller IT outsourcers compete with Indian heavyweights such as Tata Consultancy Services, Wipro and Infosys on price to win market share.
"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," U.S.-listed iGate said in a statement dated May 20.
The investigation showed that Murthy had violated iGate's policy by failing to report his relationship with the employee, the statement said. Murthy did not violate iGate's harassment policy, it added.
Most iGate's employees are in India. The company is based in Fremont, California.
After leaving Infosys, Murthy founded a company that was bought by iGate. In 2011, he teamed up with buyout firm Apax Partners to conduct iGate's $1.2 billion purchase of much-bigger Indian rival Patni Computer Systems.
Murthy recently came out with a strategy to challenge the outsourcing sector's billing model by charging for results instead of basing fees on the time and labor put in by the armies of staff working for India's big firms.
The strategy is meant to appeal to clients with less-certain budgets in a tough economy.
(Reporting by Sumeet Chatterjee in MUMBAI; Editing by Miral Fahmy)