Infosys has faced several challenges over the years including a crisis in 1989 that almost led to the company's collapse. In 2009, Infosys fired 2,100 employees due to poor performance. Infosys also faced accusations of visa fraud in 2011 and paid a $34 million settlement. Under CEOs SD Shibulal and Narayan Murthy, Infosys struggled with declining performance, but has shown improved growth under current CEO Vishal Sikka through investments in new technologies.

1. Infosys Limited

2. 1989: The crisis, and how Infosys began to grow
Who is to be blamed for Infosys poor performance?
2013: Return of Narayan Murthy
Rohan Murthy leaves Infosys
2014: Infosys under Vishal Sikka’s leadership
Accusation of visa fraud
2009: Infosys fires 2,100 for poor performance.
Summary:

3. 1989: The crisis, and how Infosys
began to grow
• Infosys wanted to make an impact in the American market & got its first
joint venture partners in KS Associates.
• In 1989 the collapse of the KSA joint venture led Infosys to its first crisis.
The company was on the verge of collapse.
• One of the founder-partners -- Ashok Arora -- was dejected with the way
the company was going, and decided to quit.
• Infosys was almost sold off: The company was going through a rough
phase. Many stakeholders thought that it was wise to sell it off.
• However, Narayan Murthy had other plans and in 5 hours long meeting he
convinced others to work even harder.
• In 1992, the market liberation took place and Infosys never looked back
since then.

4. Who is to be blamed for Infosys' poor
performance?
• Chief operating officer S D Shibulal was promoted as CEO in
2011.
• Under Shibulal’s leadership, Infosys has not only lost to
closest peer CTS but increased the gap with larger competitor
TCS
• Sales were down, profits were down, employee morale was
low. The reason was not that the market was down; other
competitors had done well.

5. Who is to be blamed for Infosys' poor
performance?
• The blame for this lost focus is often put on the company’s ‘Infosys 3.0’
strategy and its execution, which was conceptualised and closely led by
Shibulal.
• It was a strategy shift from bread and butter service provider to
emphasize on making sophisticated product for the long haul — had left
investors confused and overall revenues were on a steady decline.
• Strategy Infosys 3.0 was in the right direction. But without that
background, you can't build the next level. So, to that extent, Shibulal was
ahead of the curve.
• Almost everybody agrees that the intention was right but the timing was
bad because hardly anybody was willing to spend on massive
technological transformation which requires high-end consulting work.

6. Who is to be blamed for Infosys' poor
performance?
• Additionally, the problem got aggravated when Infosys lost
focus on their core job, like BPO (business process
outsourcing) and infrastructure management services
• Shibulal’s tenure also coincided with the post-recession
period when top Fortune 500 clients had tightened their IT
budgets.
• On Glassdoor, an employee-rating website, Shibulal’s approval
rating stood at 50-60% in 2014—the lowest among CEOs.
• The basic problem of Infosys has been this leadership crisis.
• A failure of the board: One of the most important
responsibilities of any board is planning for succession—
identifying at least one leader who can immediately take up
the role if the current CEO gets hit by a bus.

7. Who is to be blamed for Infosys' poor
performance?
• If things were not working out under Shibulal, then the next
CEO should have been appointed then and there. But it clearly
didn’t happen.
• The directors were caught in a situation where there were just
too many moving parts. While the board was preparing for
succession planning, keeping in mind Shibulal’s date of
retirement (early 2015), two things changed in quick
succession—growth faded out and the company got trapped
in a messy legal battle about visas in the US.
• 40% of Shibulal’s energy was on visa issue.
• Things became too hot to handle and Murthy came in.

8. Return of Narayan Murthy
• Retirement age for a chairman being 60, Narayan Murthy had to step
down as chairman in 2002
• Due to deteriorating financial performance and with employee morale at
an all-time low, Narayana Murthy was called back.
• Mr. Murthy's first few moves were all necessary interventions:
o he hiked salaries by around 8 per cent across the board (at some levels
this came after a gap of two long years)
o he opened up channels of communication with employees and started
regularly interacting with investors.
o Non-performers had to go.
• There had been sluggishness in the team, partly due to weak leadership
and lack of clarity in direction, and some trimming was for the good.
However, there were 10 executive level exits in that one year.

9. Return of Narayan Murthy
• Over several investor and analyst meets, Murthy continued to harp on about
optimizing costs to improve margins. These went down well with clients,
investors and the markets.
• In 2013-14, Infosys doubled revenue growth, added 238 clients and
expanded operating margins to 25.5 per cent. Share prices too rose. Despite
these positives however, its revenues were lagging competition.

10. June 2014: Rohan Murthy leaves
Infosys
• Murthy, along with other founders, said that none of their children would
work for Infosys. This left no room for nepotism at Infosys until 2013.

11. 2014: Rohan Murthy leaves Infosys
• Murthy, laid out three conditions for his return in 2013 - he
needed all the powers to make decisions, a private jet for
travel to all the delivery locations, and the entry of his son
Rohan Murthy.
• Murthy assured them Rohan would be there just as an
executive assistant, nothing else.
• Rohan turned out be more than an executive assistant.
• Murmurs started about Rohan being groomed for the top
post, a practice uncommon with Infosys.
• Rohan was an EA but he became an 'extra constitutional
authority'. He didn't understand the business, but the
organisation started taking decisions based on his views

12. • Rohan started an attempt to measure individual time spent at
work. He said people were working 6.5 to 7 hours instead of
nine. A software was installed on all PCs to track employee
productivity
• Employees protested against the software being installed on
their machines saying “this is not a factory“.
• On yet another occasion, Rohan said that graduates from
Harvard were paid $100,000 when they joined corporations.
Why should Infosys pay its sales guys more? So $100,000,
without perks, became a benchmark.
• However, He had to leave along with Narayan Murthy when
Vishal Sikka was appointed as new CEO & MD.

13. Under Vishal Sikka’s leadership
• Sikka is the first non-founder to being given the top job at
Infosys. To ensure that Sikka gets a free hand founder
members including Murthy who were part of the board has
decided to step down from their executive roles
• Under Sikka, the company is now posting strong growth
numbers for the last few quarters.
• New services like Design Thinking, solutions in artificial
intelligence and intellectual property-led businesses are
expected to contribute at least 10 percent of Infosys' revenue
in the coming years.

14. Under Vishal Sikka’s leadership
• Besides, the company has also been aggressively
investing in startups working on new technology
areas under Sikka's leadership.
• The tenure of its chief Vishal Sikka is extended by
nearly two years till March 2021, saying his
initiatives have helped the company move
towards reclaiming its industry leadership
position.

15. Accusation of visa fraud
• Jack Palmer, whose visa fraud case against Infosys
had led to a $34 million visa fraud settlement -- the
largest in US history.
• Palmer was a project manager at Infosys when he
filed the case against the outsourcer in 2011, he had
been working with Infosys since 2008.
• He was the first to allege that Infosys was writing
false invitation letters for B-1 visas for Indian
employees. Mr Palmer claimed that he was asked to
write one and he refused.

16. Accusation of visa fraud
• Palmer alleged that companies such as Infosys continue
to abuse the B1 and H1B visa laws as well as the
income tax
• Infosys was accused of purposefully sending its Indian
employees to work full-time on incorrect visas.
• An H1B visa is a non-immigrant visa used by American
companies who wish to employ foreign workers in
occupations that require college degrees or their
equivalency
• The suit claims that Infosys sent employees to work in
the US who did not meet this requirement.

17. Accusation of visa fraud
• Palmer alleges that following increased restrictions on H1B
visas in 2009, Infosys began sending employees on B1 visas.
• B1 visa or 'Visitor for Business‘ visa is for a short duration for
business related reasons that do not require actual labor work
or receive payment from a U.S. source.
• In the settlement, Infosys paid $34 million to resolve all
allegations.
• Infosys denies and disputes any claims of systemic visa fraud,
misuse of visas for competitive advantage, or immigration
abuse. Those claims are untrue and are assertions that remain
unproven

18. 2009: Infosys fires 2,100 for poor
performance
• Infosys Technologies had fired 2,100 people across the
country, after an annual performance appraisal exercise
saying that the tolerance for non-performance has come
down to zero
• The appraisal was conducted for 60,000 of the employees. At
the bottom, some 3.5% of the people were either outplaced
or left the company.
• Outplacement is a new jargon used by enterprises, which
means off-loading excess staff to another employer.

19. 2009: Infosys fires 2,100 for poor
performance
• However, outplacing is not a viable option in
the scenarios where few jobs are available in
the market during recession.
• Though reason given for bulk firing was
performance appraisal, many of them believe
that it was due to recession.