Infosys Limited-Management in IT

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Infosys Limited
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Summary
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1989 The crisis, and how Infosys began to grow

• Infosys wanted to make an impact in the American
  market got its first joint venture partners in
  KS Associates.
• In 1989 the collapse of the KSA joint venture led
  Infosys to its first crisis. The company was on
  the verge of collapse.
• One of the founder-partners -- Ashok Arora -- was
  dejected with the way the company was going, and
  decided to quit.
• Infosys was almost sold off The company was
  going through a rough phase. Many stakeholders
  thought that it was wise to sell it off.
• However, Narayan Murthy had other plans and in 5
  hours long meeting he convinced others to work
  even harder.
• In 1992, the market liberation took place and
  Infosys never looked back since then.

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Who is to be blamed for Infosys' poor performance?

• Chief operating officer S D Shibulal was promoted
  as CEO in 2011.
• Under Shibulals leadership, Infosys has not only
  lost to closest peer CTS but increased the gap
  with larger competitor TCS
• Sales were down, profits were down, employee
  morale was low. The reason was not that the
  market was down other competitors had done well.

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Who is to be blamed for Infosys' poor performance?

• The blame for this lost focus is often put on the
  companys Infosys 3.0 strategy and its
  execution, which was conceptualised and closely
  led by Shibulal.
• It was a strategy shift from bread and butter
  service provider to emphasize on making
  sophisticated product for the long haul had
  left investors confused and overall revenues were
  on a steady decline.
• Strategy Infosys 3.0 was in the right direction.
  But without that background, you can't build the
  next level. So, to that extent, Shibulal was
  ahead of the curve.
• Almost everybody agrees that the intention was
  right but the timing was bad because hardly
  anybody was willing to spend on massive
  technological transformation which requires
  high-end consulting work.

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Who is to be blamed for Infosys' poor performance?

• Additionally, the problem got aggravated when
  Infosys lost focus on their core job, like BPO
  (business process outsourcing) and infrastructure
  management services
• Shibulals tenure also coincided with the
  post-recession period when top Fortune 500
  clients had tightened their IT budgets.
• On Glassdoor, an employee-rating website,
  Shibulals approval rating stood at 50-60 in
  2014the lowest among CEOs.
• The basic problem of Infosys has been this
  leadership crisis.
• A failure of the board One of the most important
  responsibilities of any board is planning for
  successionidentifying at least one leader who
  can immediately take up the role if the current
  CEO gets hit by a bus.

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Who is to be blamed for Infosys' poor performance?

• If things were not working out under Shibulal,
  then the next CEO should have been appointed then
  and there. But it clearly didnt happen.
• The directors were caught in a situation where
  there were just too many moving parts. While the
  board was preparing for succession planning,
  keeping in mind Shibulals date of retirement
  (early 2015), two things changed in quick
  successiongrowth faded out and the company got
  trapped in a messy legal battle about visas in
  the US.
• 40 of Shibulals energy was on visa issue.
• Things became too hot to handle and Murthy came
  in.

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Return of Narayan Murthy

• Retirement age for a chairman being 60, Narayan
  Murthy had to step down as chairman in 2002
• Due to deteriorating financial performance and
  with employee morale at an all-time low, Narayana
  Murthy was called back.
• Mr. Murthy's first few moves were all necessary
  interventions
• he hiked salaries by around 8 per cent across the
  board (at some levels this came after a gap of
  two long years)
• he opened up channels of communication with
  employees and started regularly interacting with
  investors.
• Non-performers had to go.
• There had been sluggishness in the team, partly
  due to weak leadership and lack of clarity in
  direction, and some trimming was for the good.
  However, there were 10 executive level exits in
  that one year.

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Return of Narayan Murthy

• Over several investor and analyst meets, Murthy
  continued to harp on about optimizing costs to
  improve margins. These went down well with
  clients, investors and the markets.
• In 2013-14, Infosys doubled revenue growth, added
  238 clients and expanded operating margins to
  25.5 per cent. Share prices too rose. Despite
  these positives however, its revenues were
  lagging competition.

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June 2014 Rohan Murthy leaves Infosys

• Murthy, along with other founders, said that none
  of their children would work for Infosys. This
  left no room for nepotism at Infosys until 2013.

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2014 Rohan Murthy leaves Infosys

• Murthy, laid out three conditions for his return
  in 2013 - he needed all the powers to make
  decisions, a private jet for travel to all the
  delivery locations, and the entry of his son
  Rohan Murthy.
• Murthy assured them Rohan would be there just as
  an executive assistant, nothing else.
• Rohan turned out be more than an executive
  assistant.
• Murmurs started about Rohan being groomed for the
  top post, a practice uncommon with Infosys.
• Rohan was an EA but he became an 'extra
  constitutional authority'. He didn't understand
  the business, but the organisation started taking
  decisions based on his views

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• Rohan started an attempt to measure individual
  time spent at work. He said people were working
  6.5 to 7 hours instead of nine. A software was
  installed on all PCs to track employee
  productivity
• Employees protested against the software being
  installed on their machines saying this is not a
  factory.
• On yet another occasion, Rohan said that
  graduates from Harvard were paid 100,000 when
  they joined corporations. Why should Infosys pay
  its sales guys more? So 100,000, without perks,
  became a benchmark.
• However, He had to leave along with Narayan
  Murthy when Vishal Sikka was appointed as new CEO
  MD.

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Under Vishal Sikkas leadership

• Sikka is the first non-founder to being given the
  top job at Infosys. To ensure that Sikka gets a
  free hand founder members including Murthy who
  were part of the board has decided to step down
  from their executive roles
• Under Sikka, the company is now posting strong
  growth numbers for the last few quarters.
• New services like Design Thinking, solutions in
  artificial intelligence and intellectual
  property-led businesses are expected to
  contribute at least 10 percent of Infosys'
  revenue in the coming years.

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Under Vishal Sikkas leadership

• Besides, the company has also been aggressively
  investing in startups working on new technology
  areas under Sikka's leadership.
• The tenure of its chief Vishal Sikka is extended
  by nearly two years till March 2021, saying his
  initiatives have helped the company move towards
  reclaiming its industry leadership position.

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Accusation of visa fraud

• Jack Palmer, whose visa fraud case against
  Infosys had led to a 34 million visa fraud
  settlement -- the largest in US history.
• Palmer was a project manager at Infosys when he
  filed the case against the outsourcer in 2011, he
  had been working with Infosys since 2008.
• He was the first to allege that Infosys was
  writing false invitation letters for B-1 visas
  for Indian employees. Mr Palmer claimed that he
  was asked to write one and he refused.

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Accusation of visa fraud

• Palmer alleged that companies such as Infosys
  continue to abuse the B1 and H1B visa laws as
  well as the income tax
• Infosys was accused of purposefully sending its
  Indian employees to work full-time on incorrect
  visas.
• An H1B visa is a non-immigrant visa used by
  American companies who wish to employ foreign
  workers in occupations that require college
  degrees or their equivalency
• The suit claims that Infosys sent employees to
  work in the US who did not meet this requirement.

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Accusation of visa fraud

• Palmer alleges that following increased
  restrictions on H1B visas in 2009, Infosys began
  sending employees on B1 visas.
• B1 visa or 'Visitor for Business visa is for a
  short duration for business related reasons that
  do not require actual labor work or receive
  payment from a U.S. source.
• In the settlement, Infosys paid 34 million to
  resolve all allegations.
• Infosys denies and disputes any claims of
  systemic visa fraud, misuse of visas for
  competitive advantage, or immigration abuse.
  Those claims are untrue and are assertions that
  remain unproven

 
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2009 Infosys fires 2,100 for poor performance

• Infosys Technologies had fired 2,100 people
  across the country, after an annual performance
  appraisal exercise saying that the tolerance for
  non-performance has come down to zero
• The appraisal was conducted for 60,000 of the
  employees. At the bottom, some 3.5 of the people
  were either outplaced or left the company. 
• Outplacement is a new jargon used by enterprises,
  which means off-loading excess staff to another
  employer.

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2009 Infosys fires 2,100 for poor performance

• However, outplacing is not a viable option in
  the scenarios where few jobs are available in the
  market during recession.
• Though reason given for bulk firing was
  performance appraisal, many of them believe that
  it was due to recession.