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Pravin Rao, team need to check attrition at Infosys, say analysts

The management changes could also make clients cautious and competitors more aggressive, they noted

Press Trust of India  |  New Delhi 

Newly appointed interim Infosys CEO  U B Pravin Rao in Bengaluru on Friday. Photo: PTI
Newly appointed interim Infosys CEO U B Pravin Rao in Bengaluru on Friday. Photo: PTI

Infosys' interim CEO U B Pravin Rao and his team face a major challenge of reining in higher attrition resulting from the senior management churn and a drop in employee morale, according to analysts.

The management changes could also make clients cautious and competitors more aggressive, they noted.

"Significant churn in senior management and a drop in employee morale leading to a rise in attrition could hurt Infosys' performance, if not addressed by Pravin and his team," Macquarie Research said in its latest report.

It noted that the company has indicated its willingness to meet key clients to address any concerns they may have due to the events of the past few days.

Vishal Sikka, first non-founder CEO, quit last week citing slander by founders. The board, which has blamed co-founder Murthy for the CEO's resignation, has said it will find a replacement latest by March 31, 2018.

Nomura, in its report, said these developments push back "turnaround hopes" as the appointment of the CEO is likely to take time.

"... It could hamper longer-term growth if senior management attrition continues... Management churn at would make clients cautious and competitors more aggressive," it said.

JPMorgan said it expects to see an impact from this event on Infosys' performance of 2017-18 and 2018-19.

"... There is now a real risk that with his (Sikka) departure as the CEO/MD, the force and ability with which the strategy gets executed will suffer at least near term, a risk that can ill-afford in the current difficult climate for Indian IT," it said.

Also, the longer it takes for the board to find a "suitable, willing candidate" to step into Sikka's shoes, the greater the likelihood that can drift, it added.

"We see impact on Infosys' performance (FY18/FY19) from this event," it said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, August 21 2017. 23:10 IST