Recalling its founder is only one of the many steps that Infosys needs to take to recapture its leadership position, as it battles with changing technology trends, employee dynamics and possible changes in US immigration laws.
The recalling N.R. Narayana Murthy, the founder of India’s third largest software exporter, did not considerably cheer the market. The stock, at the end of trading day, was up merely 4.42 per cent.
Leadership issues
Analysts that
“It aims to reinforce the leadership but at this present condition when the company is showing a fragile growth, that is a lot of work,” said Jagannadham Thunuguntla, Chief Strategist at SMC Global Securities.
This can be gauged from the fact that Infosys has performed below industry in the last two years. This has created low employee morale and has led to several top performers exiting the company.
“There are several cases of employees in certain teams meeting or exceeding in their performances but could not get bonuses as the company did not perform,” said the CEO of a Bangalore-based headhunting firm.
The company has seen an exodus of star performers in the last couple of years, which included a bunch of ambitious professionals who were unable to grow within the company due to a glass ceiling perception.
Apart from internal employee issues, industry watchers say that the 3.0 strategy needs a hard second look. “Murthy's appointment will give Infosys 3.0 more direction, clarity and greater momentum,” said Peter Schumacher, CEO of Value Leadership Group. “However, it will need Murthy’s special attention,” opines Rumit Dugar, IT and Telecom Analyst at Religare Institutional Research.
Infosys has seen competition heating up significantly with analysts claiming TCS to be the bellwether stock and Cognizant and HCL Tech gaining ground rapidly. This, coupled with competition from IBM, Accenture, Capgemini which have India-related pricing for their customers, is something that Murthy will have to face now, according to K. Lakshmikanth, Managing Director, Head Hunters India.
US immigration Bill
Finally, there is a possible overhaul of the existing immigration Bill in the US that would increase Infosys’ human resource expenses. “The company should look at hiring greater number of locals in geographies that they operate in, which would push up costs, and achieving a happy medium is something that they need to address urgently,” said Schumacher.