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‘Make Sure You Are...'
Photo Credit :
and CEO, Infosys Technologies
(Pic by Jagdeesh N.V.)
For a company that is second in the pecking order in its industry in terms of revenues earned, Bangalore-based Infosys Technologies might appear to have a disproportionate aura in corporate India. But that is not happenstance. Year after year, quarter after quarter, Infosys has delivered not just results, but also guidance on how the next quarter or year would unfold. And inevitably, the company has bettered its guidance. Being one of the first companies to disclose its results, every quarter, Infosys’s guidance sets the tone for the IT industry’s outlook for the future, and has become a benchmark for everyone associated with the industry — companies, employees, analysts, journalists, students, et al. Perhaps, even more important is the exalted status of Infosys as one of India’s most ethical companies, making it also one of the country’s most respected. ‘Expectation’, therefore, has become the middle name of the company. In troubled times, that role becomes even more key. In an interview with BW’s Dhanya Krishnakumar, the company’s CEO and Managing Director, S. (Kris) Gopalakrishnan, holds forth on how Infosys manages these expectations. Excerpts:
Expectations ride high on the kind of guidance Infosys gives out. How difficult is it to manage these expectations?
If you base your statements about the future on verified data, and if you are willing to share that data, then people understand what is happening. For example, we spoke about a survey we did amongst our clients during the (announcement of fourth quarter 2008-09) results. Majority of clients said there would be decline in their budgets, some of them saying as much as 10 per cent, that is why we gave a guidance of negative growth. Many people within the company leadership already know about these numbers. We want to share what we know with our investors, shareholders, etc. That is how we build trust and confidence.
You have to set goals for people, which in a state of flux, can be moving targets. In such a scenario, how does one maintain employee confidence?
We have created a rhythm for the company. We do five-year scenario planning, three-year business plans, one-year budgets, and every quarter the budgets are revised and we announce results. We give annual goals to employees and then again we can change the number for the company and the budget for the business unit; we also give them an opportunity to revise their estimates every quarter. They understand the numbers.
But when resources are constrained and you still have goals to meet, how brutal does your assessment have to be about what needs to be done away with?
People understand that we have to make adjustments. We have made, for example, adjustments to travel, to some of the discretionary spends such as project parties. We are not planning to give any salary increments, but the variable component is still budgeted and, based on performance, we will pay out that. We will go back and review compensation, salary, etc., if things improve.
Again, for employees, we have a relative ranking system — we tell them that relative to others this is where you are, and some happen to be at the bottom. In normal times, we would have said we’ll give you another six months, try and improve, and we’ll help you, etc. Now we have people in excess, and we have already warned them that performance has to improve. Within the context of Infosys, we have to act at this point and let people go. It does not mean they will not be successful outside Infosys.
The company is also going out of the way to help employees; in fact we have increased entry-level training from five months to seven months to ensure that we keep them engaged.
What about managing client expectations?
You have to communicate to clients constantly. We need to understand their pain points and make sure we respond. Today, most of them are concerned about the need to cut costs, so we need to offer them appropriate solutions. But that needs to be done in a fashion that we still get to hold on to the relationship, the business, the business model, the margins, etc. Some of the solutions are moving more to offshore, fixed price projects, offering them alternatives where they may not have to spend upfront, but have a pay-per-use model.
Of all the stakeholders in a business — investors, shareholders, clients, employees — which one needs more careful handling in tough times?
The role of management and leadership is to make sure that you are fair to all stakeholders. We need the right solutions for our customers and we need employees to implement and monitor that. Investors give you the money to make all that happen. In every transaction, we need to look at the best way to balance stakeholders. However, the current situation may demand you adjust slightly. For example, traditionally, we would have said, ‘In an environment, where supply is less than demand, we can be rigid on pricing’. But now supply is more, so we have to be more flexible.
Infosys is known to be one of India’s most ethical companies. Such as when the Satyam crisis happened, you voluntarily made your bank balances, etc. public.
When there is a crisis of confidence, you need to take steps to build it.
In tough times, a leader is closely watched. How much more critical is doing the right things now?
Fortunately, within Infosys it is a collective leadership system. So we discuss — amongst ourselves and with the board. What-ever we do is well thought out and understood. Yes, there is more focus on Infosys, but we have always taken the role seriously.
How much of a motivational role should a leader play especially in tough times?
You have to reach out to the emotions of people. That is absolutely essential. In this environment, the reassurance part of the emotional connect needs to be emphasised.
One important survival tip for the industry…
Resilience is very important. You have to run your business as efficiently as possible in good times and bad. From an individual perspective, you have to focus on ethics and values. They get challenged in bad times.
(Businessworld Issue Dated 27 April-04 May 2009)