Indian outsourcing giant, Infosys, needs to boot out non-performers who are paid high salaries but not adding value to the company.
Speaking at an investor conference Wednesday in New Delhi, Infosys Executive Chairman N.R Narayana Murthy said the company needed to cut costs and improve operational efficiencies, and this meant employees who "did not add value" in spite of their high paychecks might be asked to leave.
India's second-largest outsourcing company, Infosys currently has a global headcount of over 158,000 and in December said it would hire another 16,000 engineers this year. Several of its senior executives had resigned in the past year, including V. Balakrishnan, who was head of Infosys BPO, Finacle, and India business unit, Mohandas Pai, former CFO, and Ashok Vemuri, who was head of manufacturing and Americas.
Also co-founder of the company, Murthy had returned to Infosys last June in a bid to beef up the company's leadership team and guide it through the "challenging" landscape. He has since been focusing on slashing costs and returning the company on a growth path.
"One of my tasks was to ensure that the identified people who were receiving very high salaries, but were not contributing as much as we wanted, were either given opportunities where they can add value to the company or they could seek opportunities elsewhere," Murthy told analysts at the conference, as reported by The Times of India.
"Our costs have ballooned very rapidly in the last two to three years. For example, on-site compensation was 36 percent of the overall revenue in 2010-11 and it went up to 46.3 percent in 2012-13," he said. "A part of it was because we hired people at high salaries outside India and these people did not add value to the company."
In a report by The Economic Times, he suggested that senior executives who had left the company were among those who were not worth their paychecks, some of which amounted to US$500,000 to US$1 million each, and hinted that there was still "a lot of fat" left to be removed.
Noting that the departures did not negatively impact the company, Murthy said: "There is absolutely no turmoil...barring some rare exceptions, let me assure you that nobody who was adding value to the company had to leave. That's the reality."
Infosys currently is on the hunt for a new CEO to replace current chief S.D Shibulal when he reties in March 2015.