Infosys to Hire More People in U.S., China to Boost Profit, Curb Attrition

Infosys Technologies Ltd. (INFO), India’s second-largest software exporter, plans to step up hiring in the U.S., China and other overseas markets as it seeks to check rising employee turnover and boost profit.

“Our customers are global, so we want to create a global footprint,” S.D. Shibulal, chief operating officer, said in an interview on May 1. “We really need to get talent in the Philippines, in China, in the Czech Republic and Brazil,” said the 56-year-old executive, who was last week named to take over as the company’s chief executive officer from Aug. 21.

Infosys plans to hire as many as 1,500 workers in the U.S., its biggest market, in the year started in April and will more than double the workforce in China in 18 months by adding a new campus in Shanghai, Shibulal said. The Bangalore-based company is expanding overseas after earnings missed estimates for a third time in four quarters and employee attrition worsened.

“A lot of work is done from high-cost locations despite the cost because of the value that is being provided there,” said Hitesh Shah, vice president of research at IDFC Securities Ltd. in Mumbai. “It could be a type of work that needs to be delivered from close to the client’s premises. Having a local resource might be more valuable than somebody you send from India.”
Shanghai Campus

The software exporter plans to spend $130 million for the Shanghai campus where it will hire as many as 4,000 employees over 18 months. Infosys currently has 3,000 workers in China.

Infosys rose 0.6 percent to 2,922.55 rupees at the 3:30 p.m. close in Mumbai trading yesterday. The stock has slumped 15 percent this year, compared with a 7.4 percent drop in the Bombay Stock Exchange’s benchmark Sensitive Index. Larger rival Tata Consultancy Services Ltd. (TCS) has lost 0.6 percent in the period.

The company plans to add people also in Mexico, Shibulal said. Infosys boosted revenue 14-fold in the past 10 years, while increasing its workforce 13-fold to 130,820 employees.

“China is a very good place to have centers similar to India because they produce a similar number of engineering graduates,” he said. “Mexico is a very good place to have a near-shore center for the U.S.”

Employee attrition at Infosys accelerated to 17 percent in the year ended in March, its highest annual rate in at least 13 years. The company may give wage increases of 1 to 2 percent to its workers outside India in the current year, while offering staff within the country pay raises of as much as 12 percent, Shibulal said April 15.

“One of the challenges of the industry is to expand the value chain and increase high value work,” Shibulal said. “That is why it is also important to look at global talent to leverage.”