‘Rebuilding Infosys will take at least 36 months’

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N. R. Narayana Murthy
N. R. Narayana Murthy

Within days of coming back, N. R. Narayana Murthy has chalked out a strategy to rebuild Infosys. The game plan includes refocusing on its bread-and-butter outsourcing services business and boosting employee morale.

However, the turnaround could take between 36 months and 60 months, according to Murthy, who has taken over as Executive Chairman. The Bangalore-based company has been struggling to grow in the last two years leading to a recall of Murthy. At the 32nd Annual General Meeting, Murthy said his re-call was “sudden, unexpected and most unusual.”

Stating that the company’s focus during the last two years had blurred, Murthy said that it is time to take quick and firm decisions. “In the medium term, Infosys needs to accelerate growth in consulting and intellectual property.”

Murthy said that building employee morale was a key part of his agenda to drive growth. “We will enhance the confidence and enthusiasm of our employees.” The company has seen exits at the top in the past year or so, which has resulted in low employee morale and has seen attrition soar to 16.3 per cent in the 2013 fiscal. The attrition rate for the industry leader TCS in the same period was around 10 per cent.

Infosys, in its heyday, clocked growth of 30 per cent but has slowed over the past two years. Analysts are unanimous that this should be on top of the agenda, taking margin cuts if needed. Murthy appears to agree as he said at the AGM that Infosys will adopt a flexible pricing policy, where necessary. He said Infosys will focus on optimising costs and eliminating wasteful expenditure and use the savings to drive more investments into the business.

Despite the bread-and-butter business getting commoditised due to increased competition, which is putting a strain on margins and the ability to bag deals, Murthy believes Infosys can increase employee productivity to address both issues. “We will innovate and increase productivity of software development teams to improve margins even in this business,” he said.

(This article was published on June 15, 2013)
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