Organizational Behaviour

Case Analysis
Infosys: Building a talent engine to sustain growth

Submitted By :
Akash Kumar Rajput MBA (1st Year)

Executive Summary:
This case describes the Infosys culture and human resources environment in 2007. It focuses on the issues faced by Mr. Pai, in hiring, training, motivating, and retaining employees in a business that was dependent on a highly talented employee base. Specifically, the case emphasis on the ways of addressing the issues of hiring, attrition, and allocation of employees. In mid-2007, Infosys was an extremely successful business. Headquartered in India, it had played an important role in transforming global business. Revenues were growing rapidly, and the company was highly profitable. The demand for talent among IT companies in India was straining the countrys education system. At the end of March 2007, Infosys had 72,000 employees, an increase of nearly 20,000 from the previous year. Increasing growth would require even higher numbers of new employees. Attrition was also an issue, running at about 13% annually.

Talent management:
To meet the needs of its existing and planned new business, Infosys assessed their talent base each year with quarterly updates. This was integrally related to its strategic planning process, which looked at what the company should do for the next year and next five years. The planning process involved a market assessment conducted together with the heads of each business unit, which was reduced to a series of initiatives that the company would take.

 The revenue forecasted by each department determined what competencies were required and where they were needed. For human resources important matrices included attrition, employeesatisfaction scores and the percentage of recruits who accepted employment offers.

New employees:
Infosys rapid growth required that it hire a large number of new employees. On March 31, 2007 it had a employee base of 72,200 with about 25000 new hires in that particular year. Fresher, primarily recruited among universities graduates, and usually accounted for about 70% of the hires. The largest number of new employees was needed in India, hence Infosys assigned recruiters to different territories within the country and gave them recruiting goals to which they were accountable. Jobs in Infosys were highly sought after. Infosys meant trust and respectability, hence large number of people wanted to work for Infosys and be the source of great pride for their families. Hence it had large number of job application each year. In FY 2007 more than 1 million people applied for jobs at Infosys. Infosys also introduced industry-institute collaboration, Campus Connect, to be a forum for bringing best practices from the industry into emerging colleges, and to attract students to the software industry.

Characteristics of New Hires:

 Infosys sought new employees with several key attributes. They had to be extremely smart, quick learner and with positive attitude. It recruited from all engineering disciplines, looking for those with exceptional analytical and problem solving skills and capabilities. Learnability was a key criterion in hiring as well. Another consideration in hiring was diversity, since Infosys became more global, cultural diversity became important in order to create a workforce that could effectively interface with international colleagues and clients.

New Hire Training:

Infosys conducts a 14-16 week entry-level training program called the Global Business Foundation School. In addition to providing software training, the program focused on dealing with real life situations and in finding the best ways to solve problems and project management. New employees learned how to work in an organization, how to work with clients and how to work with other employees. Employees were tested at the end of the basic training program. Apart from new hire training the company also offered a wide variety of courses, including technical education, coursework specific to various client industries and courses for first time managers. The company provided recognition and rewards for the top contributors to the knowledge management site.

The Infosys Culture and Environment:

Infosys was a good place to work with a very healthy work culture and environment which made it very easier for the new employees

who were mostly college graduates to adapt to the corporate environment. The Bangalore campus had a number of restaurants, golf course, sports and cultural clubs, flexible working hours, educational programs, etc. Employees could also have their own websites where they could discuss hobbies, share poetry or other areas of personal interest.

Compensation:
Infosys paid more or less the industry median to its new employees-an amount that was publicly disclosed. With growth in the Indian economy, the number of new hires also increased and thus the entry level salaries went up by 12.5% from 2005 to 2006. The compensation system had a fixed and variable component. Infosys was a pioneer in the use of stock options in India from the early days in 1980s making a large number of its employees wealthy but in 2003 they no longer thought this option was a good way to reward their employees and hence discontinued with it.

The Attrition Issue:

Attrition for year ending on 31st march 2007 was 13.7%. Though it was below the industry average, attrition at Infosys was trending upward for the 5 quarters. Reasons for attrition included financial cause, pursuit of graduate degrees. In addition employees also left at points that represented important career steps.

 Senior managers were accountable for reducing employee turnover-this was one of the items covered in the balanced scorecard. They promoted trust and confidence as key to employee retention this required an environment of open communication, hence Infosys strives to be transparent in its dealings with employees.

Strategic responses to Attrition:

Two potential responses to the attrition issues were promoting the companys good reputation among employees so that employees are less susceptible to approaches from other companies and increasing pay since it was an issue for the increase in attrition. Infosys had done some targeted pay increases in areas where the attrition was high. Maitra proposed a third approach to Mr. Pai, a market for talent within the company, which he believed would help address both the attrition and utilization. The company allowed employees to change jobs within Infosys after working on a project for one or two years. This posed a few questions like: 1. Should managers be able to see appraisals and track the records of all employees? 2. If a manager wanted to hire an employee from this market, should the manager be able to bid up the employees salary? 3. For a company that was powered by intellect: driven by values, was the internal talent market proposal a good idea?

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