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How Infosys is cutting costs
March 16, 2009
The financial meltdown has ensured that almost all companies are implementing cost-cutting strategies. We begin a new series where we outline the measures undertaken by different companies. And we invite you to contribute.
Today, we begin with Infosys Technologies Ltd [Get Quote].
Grappling with falling sales and a dropping bottom line, companies have had no alternate but to put cost-cutting measures in place.
Here are some of the measures that one of India's most valued, and most respected companies, Infosys Technologies, has implemented.
It is asking all its employees to go in for a one-time cost savings of $10 each. This initiative is expected to help the company, which has over 100,000 people on its rolls, log in a cost saving of $1 million (around Rs 5 crore).
An internal mail from the company's CEO and MD S (Kris) Gopalakrishnan to the employees said, 'If each one of us is able to identify a savings of even $10 -- not just per day or per month -- but $10 as a one-time effort from each one of us, that would translate to a saving of close to $1,000,000. I urge each one of you as a key stakeholder of the company's success, to examine your work environment and look at opportunities that will optimise utilisation and control expenditure.'
Infosys said the letter had been issued basically to stress the company's focus on cost-cutting. "The overall message is -- don't think any expense is a small expense and don't unnecessarily spend money. Because it's a tough time. We had never seen a time like this earlier," said V Balakrishnan, CFO, Infosys Technologies.
Log in on time
It recently announced an initiative as per which if an employee reaches office before 8 am throughout a month, he will get a cash award of about Rs 500.
The move is aimed at increased utilisation of its transport services and to beat the traffic, which will result in higher productivity for the company. The company operates several buses to transport its employees. "This is to make sure that the buses are full. The capacity usage of the buses is very low at the moment," said Bala.
Discretionary spend slowdown
Discretionary expenses have been drastically reduced across the company. The Infosys senior management and board members have already offered to cut down their discretionary spends.
This includes brand building expenses and sales & marketing. "We are looking at cutting down some of the discretionary expenses. The travel cost has already come down significantly. However, we are not cutting any necessary expenses on things like training and R&D," said Gopalakrishnan.
Deliver or. . .
Infosys has placed around 5 per cent of its global workforce under the scanner. It has told its senior managers to give the lowest performance rating (4 on a scale of 1-4) to the 'underperforming' 5 per cent as a part of the company's consolidated relative ranking. Though rock-bottom rankings have been handed out earlier, this is the first time that Infosys has made it mandatory.
The move is expected to affect over 5,000 employees.
The company has decided to implement a six-month mentoring programme for such employees after which it will decide their future based on the improvements they have made. As a part of this programme, each affected employee will be asked to work under the supervision of a mentor who is a senior executive.
During this period, the employee will not be given any important assignment, even though he will be allowed to work on the project where he is working at present. If the concerned employee is on bench, he will give all his time for the mentoring programme. During this time, the employee will get full salary as well as the regular allowances.
"While 50 per cent of such employees come back to the system, others get the message and quit voluntarily in most cases," Infosys Vice-president and Group HR Head Nandita Gurjar said.
Infosys has asked its staff to travel on an economy-class ticket if the flying time is less than four hours.
Chief mentor Narayan Murthy recently flew to Sri Lanka, and he flew economy.
Variable pay cut
It is looking at slashing the variable pay component of its employees' salaries.
Time for a sabbatical?
Employees have been issued letters stating they could opt for a one-year sabbatical to engage themselves in philanthropic activities. They would continue to draw 50 per cent of their salary during the period.
However, only those employees who have been on the company rolls for at least two consecutive years before are eligible for the offer. A panel comprising senior members of the Infosys leadership team will decide each case.
Smaller pay hike
Employees may get pay hikes below 10 per cent this year, the company's chief financial officer S D Shibu Lal has said. Which means they are lot luckier than many others who have had to face pay cuts, longer working hours, additional responsibilities and even job loss.
Infosys has set up a portal where employees can submit ideas that could range from ensuring all computers and lights are switched off at the end of the day to bigger business ideas which could be incubated.
So far the company has apparently received over 1000 such ideas which it is in the process of evaluating.
Are you an Infosys employee? Do let us know what's happening at Infosys.
Is your company cutting costs?
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