Tuesday, August 14, 2012

It has been able to shoulder the responsibility well.

Whether its about employees, shareholders, customers, suppliers, or India at large, Infosys realises that it has a huge reputation to protect. So far, it has been able to shoulder the responsibility well. Infosys talks to B&E... by Virat Bahri 

When you talk about value for customers, the very fact that Infosys’ repeat business accounts for over 90% of its total revenues speaks volumes of the amount of importance it attaches to customer relationships. This detail does invite criticism of the company being too conservative and low on aggression. They also believe in absolute transparency and derisking of their dealings, as the company does a due diligence on every customer to ensure in every possible way that the deal is not a risky one; particularly with respect to payments by looking at their credit default spreads. CFO V. Balakrishnan comments, “Where CDS is high, we can felt that some of these customers could be in highly vulnerable positions. We put a greater focus on a/cs receivables from them. We ensure that we are able to collect the money on time. In fact our a/cs receivables of 58-60 days includes the credit period we give to our client of 30-35 days, which is one of the best in the industry.” They have tightened their risk management processes even further after the post-Lehman experience.

This extra caution is linked to Infosys’ cash rich and debt free position that it wants to protect at any cost. And that kind of cash has its advantages. Balakrishnan tells us how the company does 99.99% of its payments to vendors via electronic payment, and uses this high creditworthiness to attract better prices from its vendors. In a sense, that is a win-win for both parties. Cash flow position also helps it in implementing a more employee-friendly HR strategy, as V. Mohandas Pai, Director-HR, Infosys, points out, “What Infosys had been doing is, for helping employees with their cash flows, it pays a part of the variable pay for the quarter in advance. This was done with the understanding that the final amount would be calculated after the results and any difference adjusted.”

In tune with Narayana Murthy’s larger vision, the Infosys Foundation was formed in 1996, and its mission has been to promote the well being of the underprivileged. The foundation works on four areas – healthcare, rural development and social rehabilitation, learning and education and art and culture. Under healthcare, the company has accomplished a number of projects, including building of a super-specialty hospital in Pune and a dharmashala at the Kidwai Cancer Institute in Bangalore. For rural development, Infosys conducts programmes for the benefit of under-privileged children, poor women, families hit by natural calamities, et al. For education, the company has taken steps like donating books, promoting computer education, redeveloping old infrastructure and giving scholarships. Under the arts initiatives, the company is endeavouring to preserve local arts and culture in Karnataka and Andhra Pradesh.

But don’t these CSR efforts run opposite to what standard think propagates. Undoubtedly, stakeholder expectations can run contrarily to each other, an issue that Infosys faced particularly during the recession period. But the company has steadfastly believed that honest communication and complete transparency are the ultimate solutions to all such issues. An eco-system of trust and values takes time to build and can be lost in an instant. On those parameters, till, date, the track record of Infosys hasn’t been too bad at all.


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posted by Editorial at 5:45 PM