In an effort to boost morale of employees, Infosys CEO Vishal Sikka has asked employees to focus on execution, disregard speculation over Boardroom battles, governance, visas and has asked them to stay on course. In a letter written to employees, CEO of India’s second largest exporter rubbished recent reports and instead said that employees should continue to focus on its existing strategy of embracing automation and AI despite increasing pressure on pricing in legacy outsourcing services.
The issue on hand relates to the Infosys founders had written to the Board last month expressing lack of corporate governance over pay increases and severance packages given to two former senior officials. Infosys, however, clarified that it has adhered and followed corporate governance standards at all times.
“The things we had articulated 2.5 years ago are becoming clear — downward spiralling prices in the short term, automation of many roles in the near to mid-term and a broader global context that will influence all of these things,” he said in the letter. The context he refers to is with regard to law makers in the US have re-introduced a Bill to amend the H-1B visa programme, in-line with Donald Trump’s pre-election promise to end potential abuse of visa programmes by companies
Sikka pointed out that in this light, the company’s strategy will focus on higher value services on doing things that our clients themselves could not do, nor what any software package on its own could do. “Our top 10 software and services, which includes Mana, Skava, Panaya, Edge, Mainframe modernisation, cloud services, cyber security and others produce $110 million in quarterly revenue from $22 million in the second quarter of 2015 fiscal.
He referred to positive signs that included constant currency revenue growth of 9.4 per cent in the first three quarters, a 1.3 per cent year-on-year revenue growth per employee, similar operating margins despite many tailwinds such as currency volatility and clients holding on to spends due to uncertainty over political developments, particularly over H-1B visas.
The political developments have cast a shadow over the $113-billion Indian software export sector, which threatens to disrupt the existing business model of sending labour on H-1B visas. Sikka in his note exuded confidence saying that it has added five new $100 million and even asserted that in terms of revenue growth, since the last two years, the company has performed better and in line with the IT industry growth. This, in turn, has led to the company holding on to its margins through efforts like automation, Sikka said.
Meanwhile, Infosys today categorically denied any governance lapses and rifts with the founders and appointed Cyril Amarchand Mangaldas, to head corporate governance matters.
As a part of this initiative, Mangaldas will receive from promoters and other key stakeholders various inputs, evaluate them and make recommendations to the Board, the company said.
In a statement, the company said: “Infosys is in the process of a formidable transformation journey and the Board is fully aligned with the strategic direction of CEO Vishal Sikka. We are keen to further accelerate the progress and achieve even more shareholder value increase, on the foundation of sound governance,” said R Seshasayee, Chairman of the Board.
In the past few days, reports had surfaced in the media that there were corporate governance issues, CEO compensation, appointment of certain Independent Directors and severance pay relating to former employees, something which the company had denied repeatedly. While there could be differences in views on these matters they have been overwhelmingly approved by shareholders, wherever required, and on which due disclosures have been made, the statement added.