After Salil Parekh joined as CEO in January, Infosys has seen exodus in its top echelons.
Parekh has now assured investors that Infosys would hire people from outside to strengthen its account management, large deals and digital teams, according to a report. He told some analysts that the company would strengthen its leadership team and contain attrition.
Infosys saw its market cap erode by over Rs 10,000 crore, as its shares dropped 3.22% on the Bombay Stock Exchange on August 20, after the announcement on the stepping down of chief financial officer MD Ranganath. Analysts said senior management exits at the company were a key concern. Ranganath, an Infosys veteran of nearly two decades, is the fourth senior executive to quit the company after Salil Parekh took over as chief executive in January.
Rajesh Krishnamurthy quit the same month to join a French transportation firm. He was followed by Sangita Singh, who joined IBM and Nitesh Banga, who moved to GlobalLogic as its chief operating officer.
“Mr. Parekh is looking to augment leadership through external hires in account management, large deals team and select digital competencies while interventions are under way to contain attrition,” Kotak Institutional Equities analysts Kawaljeet Saluja and Jaykumar Doshi wrote in a 2 September note, after a meeting with Parekh, according to a Mint report. “Mr. Parekh believes Infosys’s high attrition can be partly attributed to its strong training engine which makes employees an attractive target,” the analysts wrote in the note. “Mr. Parekh expects attrition to decline in the coming quarters with multiple interventions kicking in, including: timely wage revisions, more promotions and better employee engagement.”
The report says Parekh spoke with at least three equity analysts over the last week.
“At our meeting with Infosys’s CEO/MD, Mr. Salil Parekh, we discussed investor concerns over the stability of the senior management team in the wake of the CFO’s recent resignation and the ability of Infosys to deal with such top-level departures,” JP Morgan Chase and Co. analyst Viju George wrote in a note to investors on 2 September, according to the report. “Our view — we received reassuring messages from the CEO on these and other aspects. Infosys has a very deep management bench as per Mr. Parekh, which should help the company deal capably with senior management departures; recent departures of business (vertical) heads and of the CFO should not have a business impact given the experience and relationships that leaders one level below bring to the table and their readiness/ability to step up as replacements.”
Indian IT firms are seeing higher overall attrition as they see talent with newer skills such as digital and analytics moving to rivals as well as global firms who are expanding their teams in India.
Infosys and Cognizant both saw attrition cross 20% in the quarter to June, implying that they are now losing a fifth of their workforce. Wipro’s attrition touched 17%. However, attrition at Tata Consultancy Services fell marginally to 10.9% in the quarter
Infosys, Cognizant and Wipro attributed the higher attrition to a great demand for talent as growth returns to the IT sector.
Infosys is tweaking its compensation and promotion policies to contain attrition. “We are making changes in very specific ways in the compensation model, the timeline of when the compensation is rolled out, how we are doing the movement of expanding leadership and promotions within the company. And my sense is, as that starts to be more properly explained and disseminated within the company, we will start to see an impact,” Parekh told ET last month.
Parekh said the changes were put in place in the start of the first quarter and would begin to show an impact in the year ahead.