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Shape up or ship out: Murthy’s message to underperformers

Asking employees not adding value to the company may have to exit, Murthy said this was needed to put Infosys back on the growth track.

Bangalore |
February 20, 2014 2:14:41 am

PP Thimmaya

Infosys chairman NR Narayana Murthy on Wednesday promised action against executives earning top-dollar salaries but turning in below-par performances.

Asking employees not adding value to the company may have to exit, Murthy said this was needed to put Infosys back on the growth track.

Speaking at an investor call with Bank of America-Merrill Lynch, Murthy said, “a lot of fat needs to be removed”. He also noted that some of the recent executive exits had been necessary, barring a few exceptions. Since last June, when Murthy returned to Infosys, there have been at least eight high-profile exits.

Underperformers, especially those earning salaries of $0.5-1 million, are to be put on a “performance improvement path”. “We will give these people the opportunity and tools to improve, but if they don’t, we will have to bid them goodbye,” Murthy said.

With compensation at overseas locations, rising from 36 per cent of revenues in FY11 to 46.3 per cent in FY13, Infosys has been on a cost optimisation drive, especially in the US; a significant number of people, mainly in the marketing department, have been either relocated to India or asked to go. Murthy described these steps as tough but necessary for Infosys, asserting that “performance is absolutely essential”. The cost optimisation drive is expected to take about 6-18 months and the company has already seen early results with the operating profit margins rising by 1.5 per cent in the latest reported third quarter results.

He said the first decision he took after returning to Infosys was to ensure a salary increase of 8 per cent, adding, salaries outside India were shooting up and those of India-based employees were stagnating. Infosys has undertaken a three-pronged strategy; besides optimising costs, it is making sales more effective and improving delivery.

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