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How Infosys plans to cut employee costs

November 27, 2013 08:34 IST

How Infosys plans to cut employee costs

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Infosys chief N R Narayana Murthy has said the company is looking at reducing the number of top officials and subcontractors at onsite locations in a bid to reduce operational costs, according to Barclays.

"Management has identified three areas to reduce its employee costs," Barclays said in a note about its analyst meeting with Infosys Executive Chairman Murthy.

"Decrease the proportion of senior people onsite by rationalising its role ratio; reduce the usage of subcontractors by improving internal training; and reduce the number of people in onsite locations in business enabling functions," Barclays said about the management's strategy.

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Image: Narayana Murthy.
Photographs: Reuters

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Murthy, who came back to the helm at India's second-largest software services exporter in June, said recent exits of senior executives following his return have had a limited impact on the company.

He added that Infosys has a full bench of senior managers to fill in any gaps, according to Barclays.

The global banking major said, "...most of the churn has been of the managers who were either not comfortable with the changed circumstance or for which the company thought that there was limited value addition. There has been only a few exits of people who have left due to higher ambitions."

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Image: Narayana Murthy.
Photographs: Reuters

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Earlier this month, Head of Utilities and Resources for North America Stephen R Pratt put in his papers.

In September, Head BPO sales Australia Kartik Jayaraman and BPO Head Latin America Humberto Andrade quit, while August saw Ashok Vemuri, Head of Americas, put in his papers.

Infosys vice president and financial services head for the Americas Sudhir Chaturvedi also quit the same month. Global Sales Head Basab Pradhan left the firm in July.

During the meeting with its analysts, Barclays said Murthy "candidly admitted" that Infosys' billing rate premium over peers is unlikely to return as customers are now more focused on near-term cash flows.

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Photographs: Reuters

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Murthy said that while he had thought in June that cost optimisation at the company could take 21 months, he now feels it could be "quicker."

"The company indicated that it could witness some early results of its cost optimisation strategy by the March 2014 quarter," Barclays said.

Infosys is also improving software delivery and sales effectiveness to improve its financial performance, Murthy was cited as saying. 


Photographs: Courtesy, Infosys

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