September 30, 2020


Infosys trimming down Workforce, 13000 to be affected

Infosys Limited is a global multinational corporation that provides business consulting, information technology, and outsourcing services worldwide based in Bangalore, India. It is one of the leading IT companies in India, only topped by Tata Consulting Services(TCS). Covid-19 Pandemic has negatively impacted Infosys’ cash flow; hence its profitability may be marginally affected. “Lower profitability and prolonged payment terms requests from clients can impact our cash flows negatively and may impact our ability to provide a dividend to shareholders,” Infosys said in its 20-F submission to the US SEC. Infosys suppliers have also invoked ‘Force Majeure‘ clauses in their contracts, which has negatively impacted its business with limited recourse. Infosys had to halt specific projects because many visas renew applications were rejected, and it included certain key personnel who couldn’t enter the country. It is projected that restrictions are to increase substantially in countries like Australia and the U.K. as countries will look to improve their local employment across many markets. Indian software major wants to reduce the decision-making time in its projects; hence is also looking to streamline management system in the top order, including a delivery manager, associate vice-presidents, senior vice-presidents, and many others. It wants to reduce its five-layered structure to two so that there is no overlapping of roles and misuse of resources.

Infosys’s wages, employee costs, and campus placement drives make up for over half of their operational costs, which they are looking forward to trimming down. There are nearly 13,000 employees according to sources working at these levels in the company, and almost 10-15% of employees will be affected. When TOI asked the company about it, a spokesperson said, “We have no plans or targets for workforce reduction. Nor do we have any predefined percentage of exits as a result of our half-yearly and yearly performance cycles.” The organization also wants to cuts costs because it is at significant risk as crucial clients in the U.S. and Europe have been impacted by the virus and are expecting their existing projects to be delayed or suspended. For the first time, a consulting company has withdrawn its growth guidance, citing uncertainties in clients’ businesses.

Even after all this happening inside the company, CEO Salil Parekh’s salary increased from the previous year to US$ 6.1 million in 2019-20 by 27%. His variables have increased exponentially while his fixed salary has reduced. His compensation included Rs 16.85 crore in salary, Rs 17.04 crore in stock options, and Rs 38 lakh mentioned as others. However, Infosys chairman Nandan Nilekani has refused to accept any payment for his services. Also, CEO UB Pravin Rao’s compensation rose by 17.1%. Although in TCS, CEO and M.D. Rajesh Gopinathan’s salary has reduced by 16% compared o the previous year. CEO Salil Parekh was quoted saying, “We can already see several European countries and U.S. states starting to re-open. We see stability and expansion in our work in the global telecommunications, high technology, and life sciences industries.” CEO Salil Parekh had returned to the company’s Electronic City headquarters in Bengaluru, along with few other employees involved in critical services. Another 15% of employees are expected to return to work this week. This news comes in just after the government announced an easing of the lockdown all over the country. They say they are following Nasscom’s advisory by allowing only a 10-15% workforce to the office. When in lockdown, their whole workforce was forced to work online remotely. They are claiming they have observed all precautionary measures to ensure the health and safety of employees. These new circumstances may require some reassessment at the front end of the organization.