Analysis of Case: Infosys (A): Strategic Human Resource Management

CASE ANALYSIS
Infosys was the brain-child of Mr. Narayan Murthy and six other friends, which was started in
the year 1981 with a shared vision of creating wealth in a legal and ethical manner. It was started
with the purpose of creating a software company that was “of the professional, by the
professional and for the professional”. As the company grew globally it was faced with national
and international regulations and at the same time were faced with employees who were
becoming dissatisfied with shrinking benefits and a disregard for their technical ingenuity.

Infosys had always tried to ensure that the firm was the Best Employer and wanted to provide
good working environment to its employees. Infosys also undertook a lot of initiatives in order to
maintain their status as an employer of choice by providing ESOPs, Open Door Policy etc.

Vision:"To be a globally respected corporation that provides best-of-breed business solutions,

leveraging technology, delivered by best-in-class people “

Mission: "To achieve our objectives in an environment of fairness, honesty, and courtesy
towards our clients, employees, vendors and society at large"

Values(C-LIFE)
 Customer Delight: To surpass customer expectations consistently
 Leadership by Example: To set standards & be an exemplar for the industry &
ourselves
 Integrity and Transparency: To be ethical, sincere and open in all our transactions
 Fairness: To be objective and transaction-oriented, and thereby earn trust and respect
 Pursuit of Excellence: To strive relentlessly, constantly improve ourselves, our
teams, our services and products to become the best

CASE FACTS:
Infosys was found by Narayan Murthy along with six of his former colleagues in 1981.In the
initial years of Infosys the bureaucratic and regulated environment were not favorable to their
vision of seeing the company grow into a global company and by 1986 they still had only one
client. Despite the adverse conditions the founders decided to stay together and the accidental
economic liberalization of the Indian economy set the stage of dramatic success for Infosys.

Infosys had an annual compound growth rate of 65%, and revenue of about US $ 754 million
in 2003.The firmgrew from 250 employees to 15000 employees and from $5 million to $754
million within a decade.
Infosys started of providing services to foreign clients from within India, thus leveraging the low
labor costs of software professionals. In the initial years they focused only on IT implementation
and IT management using the already developed solutions but over time Infosys moved toward
providing IT strategy and IT design themselves. They also focused on improving the brand
equity by a number of initiatives like becoming the first Indian company to be listed on
NASDAQ on March 11, 1999 and continuously differentiating themselves from their
competitors.

Infosys believed in the People Philosophy and recognized that its employees were the most
significant for the success of the company and took special efforts to keep the employees
satisfied and engaged. It ranked No.1 in the Business Today Best Employer Survey in 2001
and 2002. Infosys also created HALE (Health Assessment and Lifestyle Enrichment) for
employees that offered them with health checkups, yoga classes etc. The HR group was involved
in creating Infosys a fun and community empathy workplace. However, after 2003, despite these
efforts the case highlights the increasing discontent among the employees. Fast and continuous
growth made the diversity and disparity of the employee hierarchy more apparent with the
management not in touch with the rapidly changing realities of the employees at lower levels.
Infosys started experiencing a high turnover rate even though the company was expanding and
growing which meant high employee costs because of the need to build up recruiting efforts.

By 2007, the founders wanted HR to ensure that Infosys was on the top 10 lists of both the Best
Performing companies and Best Employers

PROBLEMS FACED:
 Increasing employee discontent despite the efforts of Employee Relations department.
 The implementation of C-LIFE across the organization was still a challenge.
 As a result of the continuous growth Infosys faced the challenge of managing the big
scale of employees as diversity and disparity of employee hierarchy increased.
 Challenges of executing the work efficiently and meeting the customer expectations as
the company evolved.
 Increase in the number of ‘on bench’ resources and immigration issues due to new visa
restrictions.
 Cultural and compensation disparities in the BPO subsidiaries of Infosys.
 Introduction of variable pay across the organization based on three components: company
performance, unit performance, and individual performance was thought of by some
skeptical as a way for the company to reduce compensation costs.
 Broad – Banding by dissolution of 15 layers in Infosys into 7 bands acted as a tipping
point of employee dissatisfaction and discontent.
 Rapid changes in the HR policies caused confusion among employees and managers as
well.
 The Promotions Policy now linked the promotions to the needs of the organization:
individual performance, individual’s abilities to fulfil the next role, and the existence or
 need of that particular opening as opposed to the earlier parameters of individual
performance and seniority.

ANALYZING CASE –
As a company, Infosys had come up with various innovative HR policies to increase employee
motivation and retention. We start with a SWOT analysis to assess the HR department -

STRENGTHS- WEAKNESSES-
Known for path-breaking HR practices Insufficient integration between HR and
Ranked highly in the best employer lists Middle & upper level managers
Firm vision - “to create a company of the Increasing communication gap between
professionals, by the professionals and for lower and upper levels of workforce
the professionals” Some of the HR policy changes backfired

OPPORTUNITIES
With the growing size, there was huge scope
for efficient management of human resources
By coming up with innovative HR policies,
the company could set benchmark for other
companies and createbrand equity
THREATS
People are averse to policy changes
Implementation may backfire and be
expensive
Increasing number of rival companies post
liberalization

Based on the above analysis we come up with the following suggestions regarding the change in
HR policies to facilitate the problem in hand.

SUGGESTIONS –
1. Since the employees thought that they were being deprived of creativity and technical
ingenuity, giving them more autonomy in terms of carrying out the project will increase
their motivation. Also decentralize the decision making process which empowers the
employees.
2. The employees perceived the variable pay component as a cost cutting measure. A
financial statement showing the increase in incentive pays can be circulated to the
employees. This can enforce more trust.
3. Appreciating those employees who earn the highest incentives and showcase this to the
entire team, so that others aspire to achieve this and hence motivate them.
4. To help adjust to rapid growth Infosys can recruit Human Resources as a partner in their
plan for expansion, thereby allowing that department to organize the employee
 development process to include those activities that would build the teams necessary to
work on the various projects.
5. Similar to expansion in China, look at clients outside the US to increase the number
onsite experiences, which are a crucial part of employee motivation.
6. Utilizing strategic human resources to attract the right employees that will expand the
organization’s competitive advantage in the marketplace. And working towards retaining
them by providing them autonomy and attractive pay packages.

CONCLUSION –
Along with the traditional roles of HR department, the strategic roles also play a significant role
in the growth of a company. Strategic management involves the HR department becoming a
strategic business partner in the company. SHR can fulfill an important role in change
management by helping upper management understand the situation of employeeand the reasons
for their negative reactions to changes in policies. This writer feels that strategic human
resources management provides the greatest support for a company in achieving its mission and
goals because it works with all levels of an organization. Strategic Human Resources is more
involved in helping the company to bring their employees on board by motivating employees,
encouraging effective communication, training and cross-training employees in the functions
they are expected to perform, and help company achieve its goals.