Infosys Company History

Case 1. Infosys

Infosys was founded in 1981 by N.R.Narayna Murthy, N Nilekani, N.S. Raghavan, S Gopalakrishnan, S.D. Shibulal, K. Dinesh and Ashok Arora. It is the 2nd largest IT company by Market share, head quartered in Bengaluru, with offices in 29 countries.

Q1. Do u feel problems at Infosys are serious?

Problems at Infosys-

1. Tougher performance benchmark, higher Targets.
2. Less frequent promotions, resulting in fewer salary increases
3. New certification exams linked to promotions and salary increases, wherein employee is to clear 2 such exams in a year
4. Increase in working hours from 8hours to 9 hours
5. 2 years, freeze on salary hikes and promotions
6. Moving to a variable pay structure depending on the Company Performance

Of all these issues, Infosys’s compensation structure that upsets employees most. Like many other performance-driven companies, Infosys too moved to a variable pay culture, but what miffed many employees is its execution. Infosys launched its variable pay concept in 2001, in the face of a downturn in the IT industry. Rather than introduce variable pay that linked to the performance of the individual, unit and company, Infosys announced a 10 per cent increment (the company claims 15 per cent), of which 70 per cent was linked to the company’s performance. How can the entire increment be linked to company performance; that too in a downturn when the company is unlikely to meet its internal targets?

If increments have been one part of the problem, the other reason for employee angst has been promotions. The year 2002 saw no promotions for Infoscions, which also resulted in a demotivated workforce.

As per above we see that problems at Infosys are extremely serious.

Q2. Head HR has tackled it correctly?

Sometimes we feel that: why should this be a problem for a high-performing company like Infosys? Incidentally, the performance targets set internally are much higher than the ones the company projects to outsiders and analysts. So if the company’s internal targets were not met, the company’s performance-linked incentive or CPI was not disbursed. Head HR Hema Ravichandar at Infosys clarifies that, 2001, the average increase in compensation was about 15 per cent, with close to 70 per cent of this increase linked to the company’s performance which was applicable for most employees. I don’t think a company like Infosys should have put a clause of 70% on company performance. I lower clause of say 25% would be justified, in sync with the Downturn in the Industry and Jobs Market being on a down trend, thereby retaining the employees. It sector was down and Targets were high, which was linked to performance bonus, wherein there was zero payout. How can a company link performance bonus with high targets in a down market?