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HindustanTimes Tue,21 Oct 2014

As mid-level exits surge at Infosys, investors fret

Manu P Toms, Hindustan Times  Bangalore, March 23, 2014
First Published: 23:12 IST(23/3/2014) | Last Updated: 07:22 IST(24/3/2014)

Top-level exits from Infosys have triggered higher attrition at the middle-management level, raising serious concerns among investors about the company’s growth momentum.

More than 50 people at the level of associate vice-president and above have quit the company in the past nine months since chairman Narayana Murthy’s return last July, people familiar with the developments said.

“At the senior level, the people movement is ‘personality-centric’. If a top executive leaves, seven-eight people close to him at one or two levels below him will start looking for opportunities outside the company,” a source said. “The number could be true, given that Infosys has a little more than 200 people at AVP and above levels,” a former senior Infosys executive said.

Infosys has about 150 associate vice-presidents, 25-30 vice-presidents and 15 senior vice-presidents, he added.

An Infosys spokesperson could not be reached for comments.

With key decision-making powers now shifted to the chairman’s office headed by his son Rohan Murty, a number of people with 15-20 years stint in the company have quit, the executive said.

Viju K George, analyst at JP Morgan, in a recent note to clients, said, “elevated attrition at the middle management is a bigger worry for Infosys”.

One reason for the middle-level exit seems to be Murthy’s focus on cost management. The company has reduced prices of its software services to win large deals, bringing down margins. Following this, the company brought back about 500 people from the US, mainly in customer facing roles such as account manager and solution architect. “All of them did not come back. About 20% of them stayed back in the US and joined other companies. Many of them have 10-20 years of experience,” a source said.

“We placed five of middle-level Infosys executives at other firms in last six months,” said Kris Lakshmikanth, CEO of executive search firm Head Hunters.

Narayana Murthy, in recent investor conferences, chose to play down the impact of senior-level exits in the company. “Barring a few exceptions, most people that left us were not adding critical value to the company. Over next few months, you will see some more,” he had said in February.

“I wouldn’t see it as alarming. Infosys has sufficient executive bench strength and processes in place to ensure that this does not rattle the company,” said the former executive quoted above.


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