Working Capital

Working capital Introduction

Infosys, a win of entrepreneurship zeal over odds ranging from lack of capital to domestic regulations, was formed by Narayana Murthy and six of his colleagues in 1981 when the Indian government had nationalized the economy leading to foreign software firms leaving India. Infosys soon became the blue chip company of India along with other competitors like TCS and Wipro owing to economic liberalization and success of Global Delivery Model, a project management system. With a vision of creating wealth in a legal and ethical manner, the company was aiming to achieve the distinction of being in the top ten lists of both Best Performing Companies and Best Employers.

Article Summary

Human Resource Management had been a forte for Infosys and it had been ranked No.1 in the Business Today Best Employers Survey consecutively in 2001 and 2002. The role of employees in the success of Infosys was well recognized by the top management and they had demonstrated this from time to time to the "Infoscions". It was very shocking when Infosys toppled from the Best Employer List in 2003 and the HR leadership was hard pressed for causes that led to the sudden downfall. Infosys along with other Indian software companies was focusing on the lower end of the IT value chain prior to 2000 and wanted to move up the value chain such that it could provide end-to-end solutions at lower costs and compete with bigger firms like Accenture and IBM in the international market. Becoming the first Indian company to be listed on the NASDAQ was amongst the first steps towards improving its brand equity but the top management knew that it would require a lot more effort on their part to truly differentiate themselves from the competitors.

Maintaining good employee relations was at the fore front of Infosys strategy. It recognized early that compensation was one of the major considerations for employees to choose a company and it ensured that its employee salaries were in the top 10%-15% of salaries offered by companies in its peer group. Contrary to the practice followed by other Indian firms, it issued ESOPs to its employees at purchase price of 5% of the fair market value though this had to be increased to 85% for future ESOPs owing to SEBI regulations. Employees did not have to wait for the formal Grievance Resolution mechanism to air their concerns but could do so informally any time they wished to. Infosys provided a lot of support during emergencies and had created a very effective health platform providing security to its employees. It had hobby, cultural and sports clubs so that people could have a life beyond work. It recognized that majority of its employees were fresh out of college and it tried to have an atmosphere of fun and cultural empathy by organizing events like DJ nights, quizzes, intellectual debates, dances and Employee Social Services group.