Employees left Infosys at an unprecedented pace in the last quarter, worrying its management and raising investors’ concerns about its ability to win lucrative contracts even as it posted a higher-than-expected net profit for the period.
The attrition rate, currently bigger than its two rivals — Tata Consultancy Services and third-ranked Wipro — is the highest ever seen and “more than we are comfortable with”, chief executive SD Shibulal told a briefing after the company posted a 25 per cent increase its net profit for the fourth quarter that ended March 31.
Some 18.7 per cent of overall staff left in the March quarter, the company said, up from 16.3 per cent in the same year-ago quarter and in line with the level of staff exits in the previous quarter. Shibulal said the company was trying to retain staff through pay increases, promotions and other incentives.
“Clearly some of these moves are affecting relationships and client demand as they go through this transition,” said Sam Mahtani, a London-based fund manager for F&C Indian Investment which owns shares in Indian IT firms, but not Infosys.
“They really need to bed down all the changes and give investors a stable ground so they don’t continue to surprise investors negatively on a quarterly basis. They need to go through several quarters of building investor confidence.”
The exodus of staff and senior management gathered pace after Infosys brought back from retirement its founder NR Narayana Murthy to help revive its fortunes in June last year. Some senior executives, seen as CEO contenders, left after Murthy initiated changes that also ushered in his Harvard-educated son Rohan as executive assistant. His strategy also led to some jobs becoming redundant.
Infosys on Tuesday forecast sales to grow between 7 and 9 per cent in FY15, in line with expectations, helped by an anticipated increase in US and European clients. Last fiscal, revenue grew 11.5 per cent. Infosys also said it added 50 new clients in March quarter.
Firm’s ADR dips 8% on NYSE in opening session
New Delhi: While Infosys shares closed marginally higher by 0.76 per cent at Rs 3,260.45 on the Bombay Stock Exchange, the technology blue chip’s American Depositary Receipt (ADR) fell by nearly 8 per cent in the opening session on the New York Stock Exchange. The scrip was trading at $52.1 at 11 pm IST, a decline of 6.26 per cent. ENS