Abstract:

Infosys Technologies, a leading software

company based in India, was voted the best
employer in the country in many HR surveys in
the recent years. The company was well known
for its employee friendly HR practices. Though
Infosys grew to become a US$ 2 billion company
by the year 2006, it still retained the culture of a
small company. Infosys attracted the best talent
from across the world, and recruited candidates by
conducting one of the toughest selection process.
All the selected candidates were required to go
through an intensive 14 week training program.
All the employees were required to undergo
training every year, and some of the chosen
employees were trained at the Infosys Leadership
Institute to take on higher responsibilities in the
company.

Infosys was one of the first companies to offer ESOPs to its employees. The company followed
variable compensation structure where the employees' compensation depended on the
performance of individual, the team and the company. The case highlights many such best
practices of Infosys in human resource management. It also discusses the challenges faced by the
company to retain its talented workforce.

Issues:

» Study and appreciate some of the unique HR practices at Infosys

» Understand the recruitment, selection and training practices of Infosys

» Examine some of the retention strategies adopted by the company

» Analyze some of the challenges faced by Infosys on the HR front

Contents:

  Page No.
Introduction 1
Background Note 2
The HR Practices 4
Recruitment 5
Training 6
Training New Recruits 7
Training Programs for Employees 8
Infosys Leadership Institute 9
Performance Appraisal 11
The Culture 11
The Challenges 12
Exhibits 14

Keywords:

Infosys Technologies, Best Employer in India, Training and Development, Recruitment,

Selection, Retention, Capability Maturity Model, Infosys Leadership Institute, Leadership
Development, Performance Appraisal, Organization Culture, Role Based Structure, Attrition,
Instep, Global Talent Program , Campus Connect, Compensation Structure
Infosys' sharp and intense people focus is a natural corollary of its booming business, with
customers identifying this as a quality that often separates it from other competitors in the IT
services space"1

- Business Today on Infosys winning 'The Best Managed Company Award,' in 2005.

"We believe that people are our core assets and their empowerment is the key to scalability and
longevity. Respect, dignity, fairness and inclusiveness are essential to get the best out of
employees"2

- Nandan Nilekani, CEO, President and Managing Director, Infosys, in 2006.

"It is the energy of Infoscions3 that make the environment at Infosys exciting and challenging.
Our attention to detail, quality, speed and customer satisfaction keep us on the top as we surf
successive waves of change. With every step, we learn. By identifying and fostering learnability
in Infoscions, we are enabling an agile organization, at the forefront of change.4"

- Infosys' Annual Report 2005-06.

Best Employer in India

In November 2005, Infosys Technologies Ltd.

(Infosys), based in Bangalore, India, was named
'The Best Company to Work for in India' by
Business Today magazine in a survey conducted
by Business Today, HR consulting firm Mercer5,
and international market research firm TNS6 .

Infosys had been adjudged the 'Best Company to

Work For' in 2001 and 2002 but had lost this
position in the next couple of years (Refer Exhibit
I for the 'Best companies to work for in India'
from 2001-2006). In the 'Best Employer' survey
conducted by Dataquest7-IDC8 in the year 2006,
Infosys was adjudged the 'Dream Company to
Work for.'

Moreover, Infosys was also recognized globally and featured among the top 100 companies in
Computerworld's9 'Best Places to Work for in IT – 2006'.

For participating in this survey, the companies

needed to have revenues of over US$ 250 million
in 2005, and to employ 500 employees in the US.
Infosys also featured in the list in 2004 and 2005
(Refer Exhibit II for some of the honors/awards
received by Infosys).
On the company's HR practices, Nandan Nilekani
(Nilekani), CEO, President and Managing
Director of Infosys, commented, "It is about
creating a highly motivated workforce because
this is not a factory where you can monitor the
quantum of output at the end of the day. But in the
intellectual business you cannot do that. So, you
have to create a motivated set of people who can
operate.

Best Employer in India Contd...

Attracting the best and

the brightest and creating
a milieu where they
operate at their highest
potential is very
important. Our campus
and technology
infrastructure is world-
class, we pay a lot of
attention to training and
competency building, we
try to have sophisticated
appraisal systems, we try
to reward performance
through variable pay.
These are all part of the
same motive."10

Since the early 2000s,

Infosys' operations had
been growing rapidly
across the world. The
number of employees in
the company also
increased four-fold to
44,658 in March 2006 as
compared to 10,738 in
March 2001 (Refer
Exhibit III for the number
of employees in Infosys
between 1995 and 2006).
 The company believed that its key assets were
people and that it was important to bring its
employees on par with the company's global
competitors. In spite of its rapid global expansion,
Infosys retained the culture of a small company.
According to Bikramjeet Maitra (Maitra), Head of
Human Resources, Infosys, "We like to maintain a
smaller company touch and we have split the
overall business into several smaller independent
units of around 4,000 people each."11

Background Note

Infosys was incorporated

as Infosys Consultants
Private Limited12 on July
02, 1981, by a group of
seven professionals13.
From the beginning, it
relied heavily on overseas
business. One of the
founders, Narayana
Murthy (Murthy) stayed
in India, while the others
went to the US to carry
out onsite programming
for corporate clients. One
of Infosys' first clients
was the US-based sports
shoe manufacturer
Reebok.

Infosys hired its first set

of employees in 1982
from the Indian Institute
of Technology, Chennai...

The HR Practices

Most of the HR practices of Infosys were a result of the vision of its founders and the culture that
they had created over the years. The founders advocated simplicity and maintained the culture of
a small company. The employees were encouraged to share their learning experiences...

Recruitment
While recruiting new employees, Infosys took
adequate care to identify the right candidates. On
the qualities that Infosys looked for in a candidate,
Nilekani said, "We focus on recruiting candidates
who display a high degree of 'learnability.' By
learnability we mean the ability to derive generic
knowledge from specific experiences and apply
the same in new situations.

We also place significant importance on

professional competence and academic
excellence. Other qualities we look for are
analytical ability, teamwork and leadership
potential, communication and innovation skills,
along with a practical and structured approach to
problem solving."

Training

Training at Infosys was an ongoing process. When new recruits from colleges joined Infosys,
they were trained through fresher training courses. They were trained then on new processes and
technologies. As they reached the higher levels, they were trained on project management and
later were sent for management development programs, followed by leadership development
programs...

Training New Recruits

Infosys conducted a 14.5 week technical training

program for all new entrants. The company spent
around Rs 200,000 per year on training each new
entrant. The new recruits were trained at the
Global Education Center (GEC) in Mysore, which
had world class training facilities and the capacity
to train more than 4500 employees at a time.
GEC, which was inaugurated in February 2005
was spread over 270 acres and was the largest
corporate training center in the world with 58
training rooms and 183 faculty rooms...

Training Programs for Employees

Infosys also conducted training programs for experienced employees. The company had a
competency system in place which took into account individual performance, organizational
priorities, and feedback from the clients...
Infosys Leadership Institute

The Infosys Leadership Institute (ILI) was set up in 2001 to nurture future leaders in the
company and to effectively manage the exceptional growth that the company was experiencing.
At the Institute, the executives were groomed to handle the changes in the external and internal
environment...

Performance Appraisal

The first step toward carrying out performance

appraisal at Infosys was the evaluation of personal
skills for the tasks assigned to an employee during
the period of appraisal. To evaluate the
performance, different criteria like timeliness,
quality of work carried out by the employee,
customer satisfaction, peer satisfaction, and
business potential, were considered. The personal
skills of the employees were also evaluated based
on their learning and analytical ability,
communication skills, decision making, change
management, and planning and organizing skills.
Each of these criteria was measured on a scale of
1 to 5 (with 1 signifying above the expected
performance level and 5 below the expected
performance level).

The Culture

Infosys tried to preserve the attributes of a small company and worked in small groups, with
decision-making remaining with those who were knowledgeable about particular processes. The
managers played the role of mentors and used their experience to guide their team members...

The Challenges

With the IT industry growing at a rapid pace,

Infosys planned to recruit around 25,000 people in
the financial year 2006-07, in order to maintain its
 growth. Though it had started hiring its workforce
globally, it mainly recruited engineering graduates
from India. If the industry continued to grow at a
similar pace, analysts opined that companies like
Infosys would not be able to find enough people,
especially with several multinationals entering
India and recruiting aggressively. To address this
issue, Infosys started recruiting science graduates
with a mathematics background to create an
alternate talent pool...

Exhibits

Exhibit I: Best Companies to Work for in India (2001-05)

Exhibit II: Infosys - Awards and Recognition
Exhibit III: Infosys - Number of Employees (1995-2006)
Exhibit IV: Infosys - Other Recruitment Programs
Exhibit V: Infosys - Five Year Financial Highlights (US GAAP)
Exhibit VI: Infosys Fresh Recruits Training - Best Practices
Exhibit VII: Project Management: Behavioral and Technical Competencies
Exhibit VIII: Infosys - The Nine Pillars
Exhibit IX: Retention Levels (2006)