Infosys: Does HR Matter?
Just before the financial crisis, the top management in Infosys was busy designing a system that would address several issues related to how it managed employees. It was called ‘Infosys Role and Career Enhancement’, a boring corporate term that shortened to a more exciting ‘iRace’. The idea behind iRace was to make sure its employees got a good grounding in technical skills – no one was to get a people management role before putting in eight years of technical work; it was to empower its employees – the ratio among technical leads, technical analysts and engineers expanded to 1:3:9 from 1:2:4 or 5 earlier; and more importantly the idea was to reward its best performers better by narrowing the circle of high performers. When it was launched the managers were happy, and some observers thought it would be a game changer for Infosys.
Things didn’t exactly turn out that way. In a culture (not just within Infosys, but in the industry as a whole) where career growth means ‘becoming a manager’ (unlike in US, where engineers could grow in technical stream close to the top) many employees felt they were being held back by the eight year rule; the new, flatter organisation left more employees unhappy with their ‘demotions’ than the employees who were happy with their wider span of control; and narrowing the circle of high performers got pretty much the same response as Indian government’s attempt to narrow down the number of poor people.
Some Industry insiders I spoke to at that time considered iRace a failure, and they pointed out to a rise in attrition rates following its implementation. But, a couple of them said in calling iRace a failure, we might be confusing correlation with causation. iRace simply happened at a time when Infosys was going through a rough patch. Employee dissatisfaction and attrition were a result of its poor performance in the IT services market, and not a result of iRace. (In fact, the causation, according to some studies run the other way – poor organisational performance leads to unhappy employees.) We will never know.
These explanations are worth keeping in mind while we read today’s story in ET which talks about Infosys rewarding its top performers further than it used to earlier. It’s important because it underlines the limitations of HR initiatives – even when it involves something as tangible as money – when the overall performance is sluggish. Even if this works well, it will be a stretch to tie this to Infy’s topline growth (which is its core problem).
In other words, we have to look for initiatives that address the core problem of Infosys – the performance of its ‘business operations’ segment (which includes application development & maintenance, infrastructure management services, testing and BPO). That’s the crucial part, and is probably tougher than rewarding top performers with more money.
Tech Mahindra – Mahindra Satyam is now Tech Mahindra: Welcome to the TWITCH
Five years back, the names of the top five IT Services companies lent themselves to an acronym (for which IT executives seem to have a fascination for. Refer to iRace above). Satyam, Wipro, Infosys, TCS, Cognizant and HCL Technologies were collectively called Switch companies. After Ramalinga Raju made his infamous confession and it became clear that Satyam’s numbers were inflated, there were jokes that Switch has now become witch. Today, Tech Mahindra announced that it has formally amalgamated Mahindra Satyam with itself. It will be called Tech Mahindra. The combined entity – with $ 2.7 billion in revenues and 84,000 employees – is large enough to break into top five. I am not too sure if the IT players will relish calling themselves Twitch. After all, they can do well without ‘short, sudden jerking or convulsive movements’.
Also of interest
The Big Fight: Details emerge on $5.2 billion loan for Icahn’s Dell bid | Reuters
The Age of Frenemies: Microsoft Joins Oracle in Cloud-Computing, Rivalry Thaws | Bloomberg
It’s closer than you think: Spate of Cyberattacks Points to Inside India | WSJ