Infosys is undertaking a cleanup activity that intends to plug any loopholes concerning financial malpractices within the company, which includes severe action such as sacking of more people if found guilty.
Sources in the company told BusinessLine on condition of anonymity that the company has launched an internal probe from a high-level committee, which involves non-executive chairman of the board, KV Kamath, CEO Vishal Sikka, along with other board members.
It is also interrogating more employees, cleaning up its balance sheet, bringing its European BPO business under the scanner to ensure more transparency with all its stakeholders, two sources familiar with the development added. When contacted, an Infosys spokesperson said the financial irregularities are not material in nature and the company has already made required disclosures. The company has taken disciplinary action against the employees involved. “We will not be able to comment on client-specific matters or on the investigation as they are confidential in nature,” the spokesperson added. Attempts to reach BPO CEO Gautam Thakkar were futile as he had turned off his phone.
The current issue involves over billing for Apple, one of its BPO customers, which came to light after an internal audit that resulted in the sacking of CFO and subsequent exit of Thakkar on the grounds of moral responsibility. Despite this, questions are being raised – both from increased pressure to grow revenues and the strength of Infosys’ internal audit controls. “This (audit) mechanism will be tested as Infy has moved into a new management structure that involves more decision-making autonomy to vertical heads,” said a CEO of a leading head hunting firm who did not wish to be named.
He explained that earlier, vertical heads had to get the nod from the finance department for, say, a billing rate change but that is not the case now. Also, some Infosys staff, who did not want to be named, said that issue concerning billing was brought up at the disclosure committee meetings several times and discussed but the company did not record the proceedings of the meetings and hence no records of such discussions are available.
However, others believe that Infosys should be commended for taking action, which is not normally the case in several companies.
Sanchit Vir Gogia, analyst at Greyhound Research, said that it is a brave step from Infosys side to come out and talk about the fraud going on internally in the company and will not affect their business.