Infosys has been in the new for the last few days over the whistleblower complaint against management and layoffs in the mid and senior level. And the company has now has opined that it plans to hire freshers eyeing Rs 1100 crore as cost-saving. The company said hiring more freshers will result in $100-$150 million or nearly Rs 1,100 crore cost-saving in the current financial year and will help the company in improving its operating margins, which has fallen under CEO Salil Parekh, as it boosted investments to drive growth.
The company is now focusing on improving its profit margin by saving cost, since a major chunk of its investments has been completed. “There are 21 tracks we are looking at for cost-optimisation. We are targeting $100-$150 million in cost savings as the year goes on,” a leading business daily quoted Infy CFO Nilanjan Roy as saying on Wednesday. Roy said the firm was focused on improving the bottom-end of its pyramid, which had become more barrel-shaped, by hiring freshers. It was also looking to recreate the pyramid onsite through fresher hiring, he added. Last year, Infosys hired 1,700 freshers in the US and Europe. Roy said the company would move to an asset-lite model for new infrastructure.
Analysts said the cost optimisation plan was a routine move aimed at reducing wage costs by hiring more freshers. “Cost optimisation happens every year through one or other measures. It is not that such a saving is new. They have used wage rationalisation by hiring freshers in the past. But it is good that the company has quantified it this time and that gives a little bit of comfort in profitability,” a senior IT sector analyst with a brokerage firm told the publication. The company, however, said it had no plans for layoffs. “There is no planned layoff. We have performance reviews and people who are not performing are asked to leave. This is normal, there is no targeted layoff,” chief operating officer UB Pravin Rao said.
On October 11, Rao told analysts that the attrition in the second quarter for tech services — both voluntary and involuntary — was about 19.4%. “If you look at voluntary alone it is about 18%,” he said. As of 10:40 am, Infosys shares traded 0.42% higher at Rs 715.30 apiece compared to its previous closing price of Rs 712.30. Including today’s gains, Infy shares have rallied over 8% in one week after the company clarified that the whistleblower complaint against the management is baseless and has no substance.
