Millennium Post

Infosys Q1 profit rises 21.6% but attrition rate hits record 19.5%

IT major Infosys on Friday reported a healthy 21.6 per cent growth in consolidated net profit for the first quarter, helped by increase in business from Europe and improved operational efficiency. The city-based firm posted a net profit of Rs 2,886 crore for the quarter ended 30 June this fiscal against a net profit of Rs 2,374 crore in the year-ago period. Consolidated revenue for the reported quarter were up 13.3 per cent to Rs 12,770 crore from Rs 11,267 crore in the same quarter of 2013-14 fiscal. Commenting on the performance, Infosys' outgoing CEO and Managing Director S D Shibulal said: ‘We continue to enjoy the confidence of our clients by demonstrating superior execution capability and value realisation.’ However, Infosys' employee attrition hit a record high of 19.5 per cent in the April-June quarter of 2014-15 fiscal from 16.9 per cent in the year-ago period, signalling that the internal woes of the country's second largest IT services firm are not yet over.
The firm has witnessed a spate of exits of its top level executives since June last year when co-founder NR Narayana Murthy was called back from retirement to put the firm back on a growth trajectory. Commenting on attrition, Infosys COO U B Pravin Rao said: ‘Employee attrition rates are worrisome and we are implementing various initiatives to retain good talent.’
For 2014-15, Infosys retained its conservative revenue guidance of 7-9 per cent in dollar terms and 5.6-7.6 per cent in rupee terms, much below Nasscom's industry growth outlook at 13-15 per cent in dollar terms.

In US dollar terms, its consolidated net profit rose 15.3 per cent to $482 million in the April-June quarter of this fiscal, while revenues rose 7.1 per cent to $2.13 billion during the period.
However, on a sequential basis, Infosys’ net profit dipped 3.5 per cent from Rs 2,992 crore in January-March 2014 quarter, while revenues were lower by 0.8 per cent from Rs 12,875 crore in the fourth quarter of FY14. Infosys added 11,506 employees (gross), taking its headcount to 1,61,284 employees as on 30 June, 2014. Its attrition rate was, however, higher at 19.5 per cent for the quarter. Infosys had announced a wage hike of 6-7 per cent for off-shore employees and 1-2 per cent on-site employees.

On addressing the attrition problem, Shibulal, who was addressing his last press conference as CEO, told reporters, the firm is giving timely compensation, quarterly promotions, variable payouts and has started a fast track career plan to check the rising exits. Infosys Global HR Head Srikantan Moorthy said: Attrition rate, historically, is higher in the first quarter as many employees quit jobs to pursue higher education.’ Infosys and its subsidiaries added 61 clients during the quarter. ‘We saw positive trends in our large deal wins during the quarter. We believe that this momentum will hold us in good stead as we focus on increasing volumes,’ Rao said.

BSNL, MTNL to get `39k-crore capital infusion over 5 years
Acknowledging that both BSNL and MTNL are currently in financial distress, the government on Friday said it is ‘quite serious’ to restore the health of the two telecom services providers by adopting various measures like a whopping Rs 39,458 crore fresh investment over five years. ‘Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) are in financial distress. BSNL and MTNL are faced with declining revenues from loss of market share, increasing expenditure and inability of invest in expansion of communications network,’ Communications Minister Ravi Shankar Prasad said in Rajya Sabha. ‘The government is quite serious to improve the health of the two bodies,’ he said. He also added the government was ‘conscious’ of the performance of the two firms which needs ‘substantial improvement’. He said government proposed to invest Rs 39,458 crore to bring the health of the two back over the next five years. BSNL's market share of mobile subscriber base has dipped to 10.95 per cent, as on May 2014 from 14.87 per cent in March 2009.
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