Infosys working to end employee attrition, regain market position

Infosys Ltd, once seen as the bellwether for India's information technology outsourcing industry, has been known for some time to be losing its allure as the employer of choice for young workers in the $100 billion-plus IT industry., with staff leaving at an unprecedented pace as the Bangalore-based company, forced to dig out N R Narayana Murthy from retirement and reinstate him as executive chairman, struggles to regain ground.

Now, according to a Reuters report, it is making serious efforts to retain talent.

Current and former Infosys staff interviewed by Reuters say morale has been dented by a series of senior management exits and worries about career prospects as the company's revenue and pay increases grow at a slower rate than at competitors such as market leader Tata Consultancy Services Ltd (TCS).

Annual revenue in the year to end-March rose 24.2 per cent, lagging growth of 29.9 per cent at TCS.

The annualised rate of attrition at Infosys - effectively the number of staff leaving or retiring - was a record 18.7 per cent at end-March, 2.4 percentage points higher than a year earlier. That's close to a fifth of the company's workforce of more than 160,000. The attrition rate at market leader TCS was 11.3 per cent.

India's outsourcing services industry has relied for years on an army of engineering graduates to build so-called "bench strength", key to winning new contracts in an increasingly competitive industry.

A strong "bench" signals to prospective clients that the firm can assign enough technicians to new projects. That signal is weaker when the number of staff quitting a company rises to uncomfortable levels. It also does little to attract new hires in the close-knit IT world.

"We were all excited when we joined Infy," said Sandeep Chaudhary, who last month quit Infosys after two years to go and work at a rival. "It has the best training and campus, but the company fails to utilise the training it gives its employees."

Infosys announced an average 6-7 per cent pay rise last month for India-based staff, below the average 10 percent raise at TCS. Third-ranked Wipro Ltd said it plans raises of 6-8 per cent from June.

Infosys President Pravin Rao, a leading candidate to take over as chief executive when S D Shibulal retires in January, acknowledged that attrition is higher than the 12-13 per cent rate the company is comfortable with.

Rao said Infosys is taking steps to stem the flow of those leaving: restoring regular April pay rises, having more frequent reviews for promotion, fast-tracking promotion for high achievers and increasing the fixed component in paychecks. In the past year, it has also held more 'town hall' meetings and 'jam sessions' where staff can speak informally with management.

"Yes, as a company we're seeing challenges on growth, and when growth does not happen opportunities get limited so attrition rises," Rao said in a phone interview.

He noted Infosys is hiring aggressively in sales, and expected attrition rates would return towards more acceptable levels in the coming quarters. "We're confident that once these changes start sinking in ... and growth comes back, attrition will come down," he said.

Infosys was founded in 1981 when seven engineers, including N R Narayana Murthy, pooled $250 - mostly borrowed from their wives. The company's rapid growth kick-started the outsourcing movement in India and coined the American term 'to be Bangalored' – or lose one's IT job because of outsourcing to India.

New company hires are put on a 23-week training programme regarded as among the best in the industry, and work in a Silicon Valley-style headquarters campus on sprawling grounds, with multi-cuisine food courts and state-of-the-art gymnasiums. Employee stock options helped make some of India's first salaried millionaires.

In recent years, however, Infosys has been criticised for not changing with the times, for being too conservative in chasing new business and, at times, for depending too much on Murthy, which some investors and analysts say has hobbled the development of new leadership.

A revamp, dubbed "Infosys 3.0", aimed to move the company up the value chain but fell short of expectations, prompting the return of Murthy from retirement last June to try to revive its fortunes. But his return, with his son Rohan as his executive assistant, saw at least nine senior executives depart amid a reshuffle of teams and titles. Some Infosys insiders say Murthy's return was aimed at grooming Rohan for the top job, prompting confusion and damaging morale.

"When senior management leaves in bunches, we begin to wonder if it's a sinking ship," said one Bangalore-based software consultant who has worked at Infosys for six years, but who didn't want to be named as company policy doesn't allow staff to speak to the media.

Most of the 18 current and former Infosys employees whom Reuters spoke to declined to be named.

Not everyone at Infosys wants out, and some said they were confident that Murthy's turnaround efforts would succeed. "These are hard times for Infy and a lot of employees are leaving. But I think these measures taken by Murthy are good," said another six-year Infosys 'veteran', who plans to stay.