INFOSYS

Strategic Human Resource Management

 Our Team

Amna Shaur Muhammad Rehan Saleem Maha Maqsood

Amber Imtiaz Shaheryar Iqbal Ansari Amna Sohail

Welcome!
 Introduction

• Infosys is the 2nd largest Indian IT company by 2017 in terms of revenue

• 596th largest public company in the world
• Headquarters in Bangalore, India
• 82 sales and marketing offices, 123 development centers across the world
• Major presence in India, United States, China, Australia, Japan, Middle East and
Europe
• Provides services for industries including media, healthcare, life sciences, banki
ng, insurance, telecom, retail, hi-tech, and automotive
 Services and Products
• NIA- Next Generation Integrated AI Platform
• Infosys Consulting
• Infosys Information Platform- Analytics platform
• Finacle- a global banking platform

Business Consultancy Information Technology Outsourcing

Provides Software
Provides Global management Provides end-to-end
development, maintenance
consulting, IT consulting outsourcing services by
and independent validation
service addressing business challenges
services through integrated IT and
business process
 Achievements

• 1st Indian company to grant stock option

to its employees

• Ranked no.1 in Business Today Best

Employer Survey in 2001 and 2002

• 1st Indian company to be listed on NAS-

DAQ in 1999
 Infosys Timeline

Founded by a Economic Strategic

team of 7 Liberalization Changes
people

1981 1991 2001

1989 1999 2003

Listed on
Near to Death Downfall
NASDAQ
The Birth of Infosys
• Naryana Murthy - son of a middle class school teacher
• 1950-60 in India- The reigning idea was managing
economy to redistribute wealth and remove inequality
• Attracted by socialist idea of equality
• Graduated from Paris
• French regarded wealth creation as a superior way to
remove inequality as compared to the wealth
redistribution
• Socialist by heart; but a capitalist by mind
• Two beliefs:
1- Government’s job is fostering the wealth creation
2- Incentive is important to move forward
• Spent 2 ½ year in public sector
• In I981- he along with six others started Infosys on $250
• “We were long on energy and enthusiasm but short on
capital”
 Initial Industrial Condition
• Heyday of socialism in India (nationalized economy -1980 - foreign
software firms left India)
• Less competition and low threat of new entrants
• Growing demand for customized software
• A lot of engineers were available in India
• Best opportunity for Indian suppliers of customized software
• Customers usually belonged to outside of India
• Environment was extremely “business unfriendly” due to intense
bureaucracy
Hard Reality and Near to Death
Initial Difficulties • 7 employees including Narayana Murthy
• Small budget
• Intensely bureaucratic and regulated
environment
• Restrictions placed on opening sales offices
outside India ( By 1986, Infosys only had 1 client)

• In 1989, US restricted the B1 visas

Near to Death • Company almost dissolved
• “Small unknown company with no brand equity”
• 1 cofounder left the company
• Emergency meeting
Keeping hope Alive
Decision • Naryana Murthy was confident that the company
was going to succeed
• Agreed to buy out shares of those who wanted to
leave
• One by one, all the members changed their
minds and agreed to try again
• Change in Strategy

Strength • Team work

• Shared vision
• Ability to make Infosys successful
 Change in Strategy

Body shopping Off shoring Products

Sending Indian IT ODC
professionals to the Performing work within More quality and
client site abroad India for foreign clients process focused in
and taking advantage of software development
lower labor cost
 Industry Situation
• In 1991, Indian government announced “Economic Liberalization” which dismantle
d the “license and permit raj” and significantly opened up the Indian economy

• Software industry benefited in many ways:

1- Travel and open offices abroad and hire foreign consultants

2- Current account convertibility
3- 100% ownership of high technology companies
4- New equity securities weren’t dictated by government anymore

• Many new local and multinational competitors entered the market

• In 1993, Infosys tapped the Indian capital market for its IPO
 Growth Period

• 1993-2003 had been

heady for both the Indi
an software industry &
Infosys.
• And Infosys recognized
that the info-scions
were at the heart of its
Annual Growth Revenue Employee base
impressive success
65% US $5 million to US 250 employees to
$ 754 million 15000 employees
 Transitions in Infosys
• Moving up the IT value chain
 Lower end of IT value chain  Higher end of IT value chain

IT implementation & IT IT strategy & IT

management design
 Competitor set shifted
TCS & WIPRO IBM & Accenture
Keane & EDS

 Strength over competitors

IBM and Accenture provided higher value-added services and end-to-end solutions but
are concentrated in certain geographies. Infosys provided a greater proportion of lower
end services but spans more geographies with its Global Delivery Model. Infosys just
had to add a thin layer of consultants to global model.
Transitions in Infosys (cont’d)
 Differentiation theory of founder:

“We have to continuously differentiate from all our

competitors. Ideally, we need to change the playing
field or if we can’t, then we need to change the
rules of the game. Own the rules of the game so
that everybody else is playing by our rules.”
 Industry Analysis

• Three tools used for analyze industry during the success period of Infosys
• SWOT Analysis
• Porter’s Five Forces Model
• PESTLE Analysis
 SWOT Analysis

Strengths Weakness Opportunities Threats

• Cost Leadership • Dependent on • More • Intense
• Highly skilled Limited cost/speed competition
markets (US conscious
workforce • Changes in
market) customer US
• End to end
• Not covering • Market Growth immigration
business
growing laws
solutions • Higher
markets
• Strong Financial awareness of • Rising wages
• High Attrition off-shore model in India
Position
rate
• Global reach
• Operational
excellence to
deliver GDM
 Porter 5 Forces Analysis

Competitors High
Rivalry
Threat of new High
entrants

Bargaining power High

of customers

Bargaining power Medium to High

of suppliers

Threat of Low
substitute
 Economic Social

PESTLE Analysis
Political
Profitability can be Infosys’ reputation took
As the US is a major
impacted by the a hit from the negative
market for Infosys, any
uncertainty in the coverage in the media
political change over
global market, fluctuat of the company. Fringe
there can impact the
ing exchange rates, benefits have become
company’s operations
extra taxes and high a necessity
wage pressure

Technological Legal Environmental

The company has tech Different countries have differ Infosys is following the sust
nological infrastructure ent legal framework to protect ainable business model usi
of the highest standard the rights of an organization. ng innovation, training and
enabling to recruit quali Discrimination law, Copyright, development and automatio
ty talent and serve clie patents / Intellectual property l
n. Infosys has focused on it
nts both locally and int aw, Consumer protection and
s digital technologies to add
ernationally. To keep u e-commerce, Employment la
w, Health and safety law, Dat ress different environmental
p the pace, Infosys has
a Protection challenges such as water a
built 119 development nd energy conservation
centres
Strategic HR
Management
 Strategy Process

Cycle for strategy Process:

• Setting Aspirations
• Developing the Strategy
• Incorporating Performance Feedback
Four Step Process:
• Aspirations (mission, vision and values)
• Strategic Goals (where to go)
• Strategic Analysis (key issues addressed)
• Strategy Formulation (how to best compete)
 The Aspirations
01 Wealth Creation
Creating wealth in a legal and ethical manner

02 Company for Professionals

Company of professional, by professional and for professional

03 Best Employer
Good employee management and good corporate governance

04 Become Global
India’s 1st company to present all over the world

05 Fair to stakeholders
Fair deal to all the stakeholders
 Value Addition

• From the time Infosys was founded in 1981, the founders had always tried to
ensure that the firm was the Best Employer or Employer of Choice for potential
employees.
• There are three ways in which Infosys added value to the employee:
1. Learning value - add through training – Normative Commitment
2. Emotional value - add through the work environment – Affective Commitment
3. Financial value - add through compensation & benefits – Continuance Commitment
• Founder of Infosys wanted to make it a company of professionals therefore
Infosys tapped the Indian capital market and offer shares to employees.
• For global reach Infosys created ODCs.
 Strategic HR Process - Post Liberalization
Many multinational company started setting up bases in India
and potential employees were attracted towards them as they
gave better compensation packages. Infosys addressed this
challenge as:

High Salaries
-40 01 ensured that its employee salaries were in the top 10%–
15% of salaries offered by companies in its peer group
Stock Offering
02 Issued stock option warrants, which vested over a period of
five years, to its employees at a price of 5% of the fair MV
Change in Office environment
03 Relocated Infosys to its 80-acre campus at Bangalore,
replete with extensive dining, residential, entertainment,
and state-of-the-art technological facilities as well as
ample green space and areas for recreation
Strategic HR Process in Developing “Infoscions”
A. Emotional Bonding
Emotional value can be added through the
work environment and Infosys could get affec
tive Commitment of employees

Keep doors open
Employees do not always
like to take issues to formal
mechanisms. it’s important
and Infosys recognized it
Clubs
Support in Emergencies Health Platform- HALE
Infosys created hobby,
Infosys provided a lot of Infosys Offered health
cultural, and sports clubs,
support during emergencies. checkups, yoga classes,
which organize events every
Firm supported the stress audits, and
week so people can have a
employee’s family where professional counseling on
life beyond work
needed company premises
But, Employee Discontent was still there;
When the SEBI required Infosys to
issue future ESOPs at 85% of fair
Problems along with growth market price Info-scions were
(1) As Infosys became more sorely disappointed. The disparity
process-oriented and started of expectations across the
leveraging its experience to employee hierarchy had become
perform repeatable projects, very complex.
employees realized that they
were being deprived of the
creative and technical ingenuity
that had been inherent in their
work during the initial years.
(2) Employees thought the
organization was becoming
more impersonal and that
some of the perks of the initial
years were being repealed.
 B. Values and Value Champions
C-LIFE

Customer Leadership Integrity & Pursuit of

Transparency
Fairness
Delight by example Excellence

Infosys articulated the core values and wanted every employee to adhere through C-LIFE

• People who joined the company were trained by senior leaders and then had a lot of
refresher sessions.
• Infosys wanted everyone to be Value Champions, people who communicate values
to others—newcomers, colleagues, juniors—by their own examples.
Challenges
• Execution of C-LIFE remained a
challenge across the organization.
• To maintain the company’s value
system, it tried to recruit and hire
employees based on their potential
fit with the company’s culture and
values.
• But this became a challenge, as
Infosys did not want to be
constrained by lack of resources in
its pursuit of growth.
 C. Managing Scale and Attrition Risk
Induction Programs
1. For fresh college graduates
who were joining Infosys
straight from academic life and
for whom Infosys was their first
corporate experience.
2. For professionals with prior
experience, who were joining
Infosys from another
organization.
Problems
• Diversity and disparity of the employee
hierarchy was becoming more apparent.
• Middle managers and senior managers
were not in touch with the rapidly
changing realities of employees at
lower levels.
• These managers could not understand
the frustrations of employees who were
doing less interesting work than the
managers and had not been richly
rewarded by Infosys.
• Managers also found it hard to practice
a very hands-on management approach
and struggled to delegate effectively as
their responsibilities expanded.
Strategic HR Process for Future Growth
Infosys was becoming a small large company and management realized to change

Managing Portfolio Diversity Broad Banding

01 Infosys was evolving into a
multinational firm with a portfolio of
02 Collapsed 15 layers into 7
core companies. It set up BPO bands.
subsidiary. Role-based Organization.

Strategic
Variable Pay Promotion Policy Decisions

03 Pay based on company 04 promotions depended on

performance, unit individual performance, the
performance, and individual individual’s abilities & the
performance. existence of the particular
opening within the
organization.
Managing Portfolio Diversity
• Infosys was evolving into a multinational firm with a
portfolio of core companies.
• Infosys’s consulting practice was created to provide
clients with higher-end IT strategy consulting
services.
• Established Greater China office by identifying it as a
development base and potential market for Infosys.
• Infosys set up a BPO subsidiary called Progeon.

Each of these subsidiaries clearly had cultural

and compensation disparities.
Managing these differences and employee
expectations across subsidiaries was a new
challenge for Infosys.
 Variable pay
• Until 2001, the concept of variable pay applied only to Infosys’ senior management, 10%–15% of their compensation
derived from an individual-performance.
• After 2001, variable pay was introduced across the organization, with three components.
• If Infosys improved its performance over time, the Info-scion would be better rewarded, and during a downturn the pain
would be mutually shared.
• It created an earning potential that was much higher for a better employee than for an average one.

This compensation change

received mixed reaction from
employees.
Some were skeptical of the
company’s intentions and
thought it was a way for the
company to reduce
compensation costs.
 Broad Banding
• Infosys undertook competency-modeling exercise for all roles within its organization structure.
• collapsed 15 layers into 7 bands.
• Moved toward a role-based organization
1. An employee would know exactly what his role was as well as the role he wanted to move to and the
refore he could the gaps in his skill set that s/he needed to fill to achieve the move.
2. It created an equitable framework for people-related decision-making. A numerical worth was attach
ed to each role based on its contribution to business and value-add. So now it was possible to comp
are jobs. This facilitated career planning and also introduced objectivity to the process. It wasn’t the
department head’s call now, it was coming through a scientific process of job evaluation.

Broad-banding was the tipping point at which employee dissatisfaction and discontent
reached its peak.
Rapidly changing HR policies bred confusion among employees.
Middle and senior managers were responsible for communicating these changes
effectively to employees, but some managers were unsure of certain aspects of the
change and could not face the scrutiny of employees.
This fostered misinformation and rumors, which led to further discontent and lack of trus
t between some employees.
 Promotion Policy
Infosys had linked promotions to individual
performance and seniority; but now it also
linked to the needs of the organization. But
now it depended on three factors.
The rationale behind the new promotion
policy was:
1. The criterion for promotion would be
performance and not seniority.
2. There would be no “fat” in the organizati
on’s layers.

Need of the opening

The existence or need
of that particular
Individual’s abilities opening within the
Individual’s abilities to organization
fulfill the next role
Individual performance
Individual Performance
and Seniority
 Results of Strategic Decisions

• The changes initiated since 2001 had an unintended impact in

deemphasizing the traditional culture of Infosys.
• Its small-company feel and collegial environment, where
processes and policies were flexible and customized to
individual needs, was not more.
• Problems of managing expectations and communication within
a large organization.
• Employees were doubtful about the impact of the changes; e.g.
how the variable pay mechanism or the new promotion policy
worked in practice.
• They were also unclear about the rationale behind these
changes, all of which appeared to boost the company at the
expense of employees.
• These all show that Infosys didn’t plan for the growth properly a
nd it didn’t communicate with the employees about the policies.
 Recommendations
Organizational Aspirations
Strategic Aspirations and Motivational Aspirations:
• There should be both strategic and motivational aspirations. Motivation
increases when motivational aspirations are aligned with the strategic
aspirations.
• Strategy and inspirations need to be coherent.
• Aspirations must be shared among employees to engage them in the
organization.
Recommendations
• Improve communication through all layers (employee
to employee, management to employee)
• Set a clear appraising system
• Employee recognition program – monetary and
non-monetary
• Merit-based promotion – not only sole basis but also
team basis
Thank you