Clients query Infosys on top exits, rising attrition

No impact of exits on client engagements, says company

Infosys, India’s second-largest information technology services company, has said a few of its clients have sent queries on the rising attrition in the company, especially the exits of many senior leaders in the recent past. This is the first time the city-based company has spoken about clients’ concerns on such issues.

Since co-founder N R Narayana Murthy returned to the company as executive chairman about a year ago, Infosys has seen 11 high-profile exits at senior levels. Recently, B G Srinivas, the company’s president and one of the prospective candidates for the post of chief executive, quit the company to join PCCW Ltd, the holding company of HKT Group Holdings, a Hong Kong-based information and communications technology firm.

“What we see is clearly, there have been some queries by clients on various aspects, whether it is attrition at an overall level, management departure or other reasons,” Sandeep Mahindroo, assistant financial controller at Infosys said, while addressing a Morgan Stanley investors’ conference on Thursday.

He, however, said the exits of senior business leaders wouldn’t have any material impact on client engagements, adding client satisfaction was at the levels seen earlier. The company said it was managing the void created by these exits by engaging with clients at multiple levels, such as those of chief executives, boards and vertical and regional heads.

“Some of the departures (of senior executives) are because of the fact that we are going through transition at the leadership level… In the process, we had some departures because some of our very senior business leaders who have been vital to our company’s growth have decided to part ways. But what gives us the comfort is the fact that during this period, the next level of leadership has stepped up to become global industry verticals heads,” Mahindroo said.

Chief executive and Managing Director S D Shibulal has said he will retire from the company before January 2015. With the help of two external hiring agencies, Infosys is scrutinising a pool of internal as well as external candidates for the post. Experts and analysts believe the way the selection process is being handled has created a lot of uncertainty in the near turn, impacting business prospects.

“While Infosys has maintained the demand outlook hasn’t changed, we believe there might be downside risks to the forecast. An inefficiently-handled CEO-selection process and high churn at the senior management level are the possible factors,” said a recent report by Kotak Institutional Equities, released on Tuesday. “Uncertainty and exits could impact near-term growth and delay turnaround prospects,” it added.