Move to help engage with clients closely

Despite seeming unperturbed by the recent string of high-level exits, Infosys has been working quietly to cement its leadership structure.

In a move to reduce the downside of the exits and to engage more closely with clients, Infosys has created a three-tier leadership structure consisting of about 500 executives. The first tier consists of 45 executives, the second of 150 and the third of over 300.

While Infosys did not comment on the developments as it has moved into a silent period ahead of its quarterly results, brokerage Nirmal Bang’s Harit Shaw told Business Line that the creation of such a leadership structure will lend depth as well as help groom executives take on major roles. But he was not entirely surprised by the exits in the company given the promoters’ need to fast track growth of the company.

In a recent note to the investors, Edelweiss had said that Infosys Chairman N. R. Narayana Murthy faces an uphill task of resolving internal issues and appointing a universally acceptable CEO after incumbent Shibulal’s tenure ends in March 2015.

The management is learnt to have indicated that there could be some impact due to the recent reshuffle including even attrition. But the company has been quick to identify replacements. It has also set up multiple communication channels between the clients and the teams to mitigate the risk.

As an analyst with Prabhudas Liladhar said, the mechanism will not only improve the touch points with clients but also reduce the looming risk of attrition.

Equiris Securities analyst Bhavin Shaw said Narayana Murthy has already articulated the need to improve margins and getting growth back on track and this is being done by cutting onsite costs. He pointed out that this may have led to pulling back of certain programmes and certain teams. Therefore, executives whose programmes have been scrapped may have moved to other companies. “This may translate into lower costs and higher margins. But open to question is how this will in the next six months affect the growth rate, the client touch points and the visibility of Infosys,” said Shaw.

How initiatives like the leadership re-structuring pan out in the long run depend on a variety of issues but the next six months are quite crucial for the company which needs to demonstrate some sort of stability to the clients, he said.

Infosys shares closed the day at Rs 3,486.35, a rise of less than one per cent from the previous day’s closing price.

(This article was published on December 24, 2013)
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