Infosys Attrition Rate Blinks Red, but They aren’t Worried

For the last three quarters, Infosys has been reporting a steady performance, indicating that it has gone past the rocky period. Analysts are still doubtful about what Murthy's return means for Infosys, but it seems like the Murthy-magic is working, at least for now.

Employee productivity has gone up by 2.2%. However, in the December quarter, Infosys' employee attrition rate stood at 18%-a very high number for a leading software firm.

On the Recent Management Exits

Independent director Deepak M Satwalekar and V Balakrishnan, whole-time director resigned from the board and services of the company in the quarter ended December 2013. During this quarter, the board of directors appointed Kiran Mazumdar Shaw as an additional (independent) director. Meanwhile, BG Srinivas and UB Pravin Rao were appointed as the presidents of the company, and will report to Shibulal.

On being asked how the recent exits have affected the organization, Murthy implies that it is not something that worries him. He commented in an analyst call, "It is good for them and it is good for the company. We wish them the very best." Murthy relies on the pool of leaders the organization has created. Infosys has a leadership institute in Mysore which holds a three tier programme to develop leaders and has created over 600 leaders in the company.

Shibulal states that since the exits, transitions have been smooth. "We have a very deep leadership pool in place with efficient tier-1, -2 and -3 leaders. We also have a multi-level relationship model with our clients."

Once the two new presidents Srinivas and Pravin Rao put a governance structure in place, the executive council will be disbanded from April 1, 2014.

Infosys announced its revenue for the quarter ended December 31, 2013 from its Mysore campus. Its revenue stands at $2100 mn for the quarter-an increase of 1.7% from the last quarted ended September 2013, and 9.9% from the same period last year. This means Infosys' profit for the three months rose to `2,875 crore from `2,369 crore in the year earlier quarter.

Infosys and its subsidiaries added 54 new clients and 6,682 new employees during the quarter. Their employee strength stands at 158,404 as on 31 December 2013.

Outlook for 2014

Shibulal commented that the external client environment looks good to them. "We expect client budgets to be flat Y-O-Y and expect clients to close the budgets by beginning, January. Pricing continues to be stable," Shibulal stated. Most clients are looking at cost optimization, and Infosys still sees a pricing pressure in large outsourcing deals. Shibulal considers this as an opportunity for Infosys and will reduce the cost of ownership for clients.