Attrition Issue of Infosys' Junior Staff and Senior Managers

1.                INTRODUCTION AND PROBLEM STATEMENT OF INFOSYS

Established in 1981 with initial capital US$250, Infosys Limited (the “Company”) has grown to become the first company from India to be listed on NASDAQ with a market capitalisation of US$ 44.4 billion. Best known for providing software, business consulting and IT service, Infosys regards its employees as one of the most critical assets – a belief which has assisted Infosys to become one of the biggest recruiters among Indian IT companies. The Company currently employs approximately 217,700 employees and serves more than 1200 corporate clients worldwide (Infosys Limited, 2018).

However, as with any other mammoth organisation, Infosys has its own set of human resource management issues. The Company suffers from more than 15% annual attrition rate. Pravin Rao, the COO of Infosys, asserted that the attrition was primarily observed in the employees with two to four-year experience (The Economic Times, 2018). Although he disclaimed evidencing a similar trend at the senior level, the Company has recently seen several exits at top management level. In past three years alone, Infosys has witnessed more than 20 exits at crucial positions including 3 CEOs, 3 CFOs, CCO, Executive VP, SVP etc. (See appendix 1). Hence, Infosys is facing a dysfunctional staff turnover both at the junior and leadership level.

This report aims to evaluate and audit the attrition issue of Infosys’ junior staff and senior managers respectively based on the HRM theories such as organisational culture and reward management, as well as to give feasible recommendations for addressing the issue.  

2.EVALUATION AND AUDITING ANALYSIS OF ATTRITION ISSUE

2.1 The gap between the real reward and employees’ expectation

According to Bratton and Gold (2017), creating a proper reward system (monetary, non-monetary and psychological payments) can prove to be effective in improving staff’s performance, motivation and satisfaction. However, during the primary research, it was observed that a gap exists between the junior employees’ expectation and the (total) reward package. This was identified as the main cause of the attrition among the junior level employees.

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Furthermore, the “total reward” theory (which includes both extrinsic and intrinsic rewards) can describe the overall value of the benefits received by the employees based on their performance (Employee Benefits, 2017; Wintersberger,2017). Wintersberger (2017) defines the extrinsic rewards as the tangible, quantifiable return as well as other external benefits, which “can generally be objectively and unambiguously quantified in monetary terms” (p 185); whereas the intrinsic rewards are more challenging to quantify, such as flexibility and autonomy.

To analyse the “gap” mentioned above, it is worthwhile to have a look at some of the critical reward variables of Infosys and the benefits it provides to its employees:

Based on the illustration above, Infosys offers better facilities, offices, superior work environment and high possibilities of international assignments. Despite providing an immaculate environment to work in, the Company faces high attrition rate as compared to its competitors, mainly attributable to several shortcomings in extrinsic and intrinsic reward system.

Firstly, monetary compensation, as one of the essential extrinsic rewards, is highly appealing to junior employees of Infosys. During the primary research, it was found that on average an employee with 2 to 6 years of work experience, would switch to Infosys’ competitors like TCS, Wipro, Accenture, Mind Tree, HCL, Cognizant, etc. The employees tend to stay in these competing firms for 2 to 3 years and again prepare themselves for another job-switch. The engineers switching between the competing IT companies generally get about 30% hike on their salaries which makes changing between the companies an attractive choice among young professionals. Switching the companies not only offers them a faster salary growth, but also provides access to the latest technologies and better learning opportunities which in turn increases their employability.

The psychological factors, such as autonomy for innovation and motivation of promotion, are possible issues of the Company’s intrinsic rewards. The recent graduates at Infosys desire to work on the latest technologies to keep themselves relevant in the field. However, Infosys does not permit this leniency to the employees to choose their projects at the beginning of the career. The employees may be trained in JAVA but may have to work on obsolete Mainframe technology as per business requirements. Moreover, the incentive to continue with Infosys may reduce significantly due to the scarcity of promotion opportunities – it usually takes about 8 to 10 years for an Infosys employee to reach manager level position.

2.2 Setbacks of Changing Organizational Culture

Roots of attrition at top-level management differed from that at entry level jobs, which are mainly due to non-conformance with the legacy and culture of the Company. This issue can be analysed under the organisational culture framework by Edgar Schein (2010) (Figure 1).

Figure 1: Three fundamental levels of organisational culture

(Source: Schein, 2010; Cited in Bratton and Gold, 2017)

In Schein’s demonstration, corporate culture can be imagined as an iceberg with three levels: artefacts, values and basic assumptions (2010). Bratton and Gold (2017) explained that the artefacts are tangible and visible, whereas the work-related values and basic assumptions are invisible, and are regularly associated with the strategic goals of the company (underpinning the employees’ choices and behaviours). Moreover, Zhang and Begley (2011) state that the organisational culture usually manifests itself by implementing the organisation’s policies and practices.

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37 years ago, Infosys was found by seven co-founders in Pune from a small room. During the process of becoming an IT giant and global leader, the Company has strictly maintained the core values propagated by the founders, until the first non-founder CEO, Dr. Vishal Sikka, was appointed in 2014. Soon after appointment, Dr. Sikka initiated his agenda for innovation and dramatically shifted the Company’s strategies (See appendix 4). These changes included shifting of the CEO office from Bengaluru (India) to Palo Alto (USA), changing the client-centric culture and the Company’s-acquisition strategy (Talgeri et al., 2017). Moreover, Dr. Sikka was the first Infosys CEO to use a corporate jet (Subramani, 2016) which is in stark contrast with co-founder’s values who used to travel by economy-class.

To further his transformative agenda and to curb internal resistance, he hired 16 senior executives from SAP, his previous employer (The Economic Times, 2017). Although these executives performed well in SAP, at least 10 of them failed to reach Dr. Sikka’s goals and quit within a span of 1.5 years. The open spat between Dr. Sikka and the founder Narayana Murthy was a significant concern for the board as well as for the shareholders. This controversy was partly due to non-conformance with the ideology of the co-founder Narayana Murthy. Moreover, the transformative mentality of Dr. Sikka vexed the other founders and as a result, Dr. Sikka and his executive team had to exit from Infosys in 2017. Later, the companies acquired during Sikka’s tenure (Panaya and Skava) were put on sale by the current CEO Mr. Salil Parekh – thus reverting the strategic acquisitions.

In conclusion, due to a different corporate cultural background, Dr. Sikka and his team suffered setbacks in altering the organisational culture including values, norms, policies and practises built by the co-founders.

3.RECOMMENDATIONS

Talent retention has always remained a major issue for Indian IT companies including Infosys. The following recommendations are proposed to curb attrition.

Firstly, since a reward system is a critical component which impacts the execution of a company’s strategy (Bratton and Gold, 2017), Infosys should take remedial actions to narrow the gap between the existing reward system and the junior staff expectations. This can be achieved through increasing the financial compensation, on-job trainings and providing performance-based promotion opportunities.

Secondly, Infosys should allow its employees to work on technologies of their preference for a designated time duration. This technique is employed by Google to inspire its workforce to instil creativity and introduce innovative products (Density and Mytton, 2017). This approach not only keep the employees engaged in their current assignment (which are driven by business requirements), but also boosts employee morale which leads to better commitment and job satisfaction. 

Finally, Bratton and Gold (2017) show that “organizational cultures are amazingly stable and enduring”, and a strong culture can generate a common value system which is consistent with organizational goals such as higher productivity (p 490). As the organisational culture of Infosys has been powerfully embedded in its informal norms and formal institutions since 1981, it is difficult to alter the Company’s culture in a short term.

Although altering corporate strategies is imperative to sustain long-term growth, senior management must consider the impact of such changes on the corporate culture. Therefore, Infosys must ensure that the corporate background of a top-level executive (or the CEO) complements the Company’s values as this will assist the individual to assimilate to Company’s existing culture.

Reference list

• Bratton, J. and Gold, J.(2017). Human resource management: theory and practice. Palgrave.
• Density, S. and Mytton, D. (2017). Can Google’s 20% time really work for your startup?. [online] VentureBeat. Available at: https://venturebeat.com/2017/05/13/can-googles-20-time-really-work-for-your-startup/ [Accessed 7 Dec. 2018].
• Ganesh, V. (2018). Infy lets employees ‘work from home’ for 9 days in a month. [online] thehindubusinessline.com. Available at: https://www.thehindubusinessline.com/info-tech/infy-lets-employees-work-from-home-for-9-days-in-a-month/article21347320.ece [Accessed 6 Dec. 2018].
• Infosys Limited. (2018). Infosys – Company History & Defining Milestones | About Us. [online] Infosys.com. Available at: https://www.infosys.com/about/Pages/history.aspx [Accessed 5 Dec. 2018].
• Mudgill, A. (2018). Infosys hunting for 4th CFO in 5 years! What’s happening at the top IT firm?. [online] The Economic Times. Available at: https://economictimes.indiatimes.com/markets/stocks/news/infosys-hunting-for-4th-cfo-in-5-years-whats-happening-at-the-top-it-firm/articleshow/65469333.cms [Accessed 5 Dec. 2018].
• Schein, E.H.(2010). Organizational culture and leadership(Vol. 2). John Wiley & Sons.
• Subramani, K. (2016). First ‘outsider’ CEO Sikka gets down to turning around Infosys. [online] https://www.hindustantimes.com/. Available at: https://www.hindustantimes.com/business-news/the-sikka-way-gains-currency-at-infosys/story-74dRxjXrwA9mLy6DkUIU0O.html [Accessed 6 Dec. 2018].
• The Economic Times. (2017). Five reasons why CEO Vishal Sikka had to leave Infosys. [online] Available at: https://economictimes.indiatimes.com/tech/ites/five-reasons-why-ceo-vishal-sikka-had-to-leave-infosys/articleshow/60114080.cms [Accessed 6 Dec. 2018].
• The Economic Times. (2018). Infosys sees higher attrition at junior level. [online] Available at: https://economictimes.indiatimes.com/tech/ites/infosys-sees-higher-attrition-at-junior-level/articleshow/65025055.cms [Accessed 5 Dec. 2018].
• Talgeri, K., et al. (2017). How Infosys’ Vishal Sikka disrupted organisation by moving CEO’s office from Bengaluru to Palo Alto. [online] The Economic Times. Available at: https://economictimes.indiatimes.com/tech/ites/how-infosys-vishal-sikka-disrupted-organisation-by-moving-ceos-office-from-bengaluru-to-palo-alto/articleshow/57175307.cms [Accessed 6 Dec. 2018].
• Wintersberger, D. ed.( 2017). International Human Resource Management: A Case Study Approach. Kogan Page Publishers.
• Zhang, Y. and Begley, T.M.(2011). Perceived organisational climate, knowledge transfer and innovation in China-based research and development companies. The international journal of human resource management, 22(01), pp.34-56.

Appendices

Appendix 1

(Source: Cited in Mudgill, 2018)

Appendix 2

Appendix 3

Appendix 4

(Source: Talgeri et al.,2017)