Who’s Going To Bail IT Giant Infosys Out Of Trouble?

Posted by Ranjeet Menon in Business and Economy
July 12, 2018

There was a time not so long ago when a job at Infosys used to be a crucial factor in arranging marriages in India. The influence Infosys used to have over the Indian job market is enormous. It has parallels with Siemens in Germany, where even in small towns, there a Siemens office has people from nearly every house working there.

A job in the Indian IT sector was at one time the aspiration of every graduate but when it came to marriage, a job at Infosys added brownie points, and with a very good reason. Job security at Infosys has been the differentiating factor from other IT companies. Add to this their policy of hiring employees’ spouses that was borderline outrageous. And if one such employee got the opportunity to work abroad, the company would figure out a way for the spouse to join them. But the company has become a pale shadow of those glory days because of both internal factors and external influences.

During my MBA program, I came across a case study about how Infosys, in 2004, had developed strategies to evaluate and figure out the best road to the future. One of them was investing in the infrastructure in India, however ultimately they did not pursue this. While I admit that the Indian ecosystem is extremely complicated right from acquiring land to bureaucratic red tape to political and religious influences, Infosys, with it’s enormous influence over society as a whole could have had easily negated every obstacle. The strategy they chose was to focus on expanding their clientele abroad. I believe this choice was made with the sole purpose of increasing their earnings because of the value difference in the Rupee and the currencies of western countries.

There were two major issues here. After a point in the life of an individual or a company, influence and the ability to get things done takes or should take precedence over money and wealth. Infosys caters to clients in retail, manufacturing and other sectors abroad and all such companies are in India also. In 2004 they were poised perfectly to bring the entire Indian corporate sector under their hegemony. Secondly, sitting on a mountain of profits with no debt makes any company vulnerable for a takeover bid by another company. No debts and a huge list of clients abroad are enough mouthwatering prospects to go on a takeover offensive.

The company’s woes in the last few years have been created by two factors. The first one is with the blatant misuse of the US H1B Visas. Infosys reportedly has more than 80% of their clientele in the US. The H1B Visa ecosystem has been created for US multinational companies to recruit and draw in bright minds and experienced people from foreign countries. But Indian companies, right from the heavyweights like Infosys to small recruiting consultants, have found ways to bend and bypass the Visa rules. Hogging the H1B Visas and eating away the job market in a foreign country by replacing local people with people imported from another country on a lower pay scale was never going to be a sustainable business strategy. For now, the powerful Indian lobby in the US had barricaded any investigation into the H1B Visa usage by Indian MNCs for a long time. But some day the skeletons were all going to tumble out of the cupboard which is what happened with Donald Trump’s ascent to the White House.

Wednesday, March 14, 2018 — Governor Dannel P. Malloy today announced that Infosys, a global leader in consulting, technology, and next-generation IT services, is planning to establish a technology and innovation hub in Hartford. The $20.6 million project will see the creation of 1,000 good paying, high-tech jobs in the state’s capital city by 2022. Source: Flickr.

The second and the more critical factor that has disgraced Infosys has been how it manages its employees. A very good friend of mine is a senior project manager at Infosys and we have had numerous discussions about the work he is doing and about the management in particular. There is one profound aspect about Infosys that distinguishes it from all other IT companies. For the longest time, the founding partners of the company had taken turns to occupy the CEO’s chair and be at the helm of affairs, thereby fostering a very unique corporate culture. Once their terms ended, there was no one else within Infosys to take their place. Did they not understand the enormity of the corporate culture they had created and because of this, did they forget to set in motion the wheels of inheritance? After everything that has been happening, maybe not. Instead of promoting their employees into the top management, like other IT MNCs, they started hiring executives from other companies. These external hirees are undoubtedly experienced and seasoned players, but the question is, how many years of experience with Infosys do they have to be at the helm? None. Their initial impressions about the company are formed by the opinions and words of the people at Infosys they interact with when they join which usually makes them skewed in any one direction rather than being balanced in their comprehension. This is usually the case in all companies but the unique culture of Infosys has become the stumbling block.

For representation only. Image source: Pixabay.

Above all of this, I believe one aspect of the company could threaten its very existence. They have changed their business and organizational strategies to remain competitive in the market and have been restructuring their work flow hierarchy but with a critical deficiency. They seem to be clueless about identifying the right stakeholders within the organization, the most critical aspect of Kotter’s eight steps of transformation. My friend has been with Infosys for about 15 years now and never has he been asked or consulted about changes in company strategies. Now why should a manager know about changes in company strategies? Because project management is essentially the management of the execution of business strategies. Projects are after all born from business strategies. He has been working on projects of a particular domain for a very long time so I asked him how much does he know about what Infosys is doing in that domain. He said 70%. So I asked him if that much knowledge helped him to understand the deficiencies in the company, and help create better strategies in that domain. He said yes. Stakeholders need not be executives, directors, or even managers. Even a team member can be a stakeholder if they have enough influence in the team to understand deficiencies and drive changes. Stakeholders have to be identified from ground up because all of them can provide critical information from where they stand. All of this information has to flow up and become the most important aspect of developing the organizational and business strategies. In the absence of all this, the fallout has been immensely disturbing. Employees at all levels are feeling uncertain about their future in the company. This alone  could kickstart increasing employee attrition and the propensity among IT employees to stay away from the company.

It is becoming very clear that Infosys is no longer sure about the road ahead. They hired an assertive Vishal Sikka as the CEO who had an ambitious agenda backed by mighty plans. Then the fallout with Narayan Murthy and the spat in full public view ensued which has caused immense damage to the company’s reputation and more importantly shaken the company’s confidence in itself. They seem to have realized their mistake but instead of finding someone with the right balance, they have brought in Salil Parekh who seems to be the polar opposite of Sikka. My friend was telling me that it’s been more than six months since Parekh has become the CEO but he is yet to address the employees, explain what has been happening, what would be the road ahead, or even try to calm their uneasiness and uncertainty. Not even by an email. When communication flow from top management to the base of the company pyramid stops, it means only one thing. Everyone at the top are fighting their own battles and are trying to save their own skins.

My friend has been helplessly watching his career stagnate over the years. At the level of his immediate manager he says there are people with 25 years of experience. Most of them seems to have resigned themselves to their life at Infosys because they have family responsibilities, loans, and more, and have become totally risk averse. The company seems to have piled on a bloated middle management, an obese company midriff. It is very evident that Infosys does not know what to do with them. What is saddens me is that Infosys will never know what their employees might be capable of and what they can do to transform the company. There is only one strategy for mature organizations to follow. Empower and transform their employees, let them grow, and simply ask them. They will know how and where to take the company ahead.

Featured image source: Nikhil Kulkarni/Wikimedia Commons.