Infosys Results: Attrition rate jumps to 17.3% in Sept quarter

Moneycontrol Bureau

Even though Infosys' September quarter earnings surprised the street, chairman Narayan Murthy has not been able to control its profit margin and high attrition rate.

During the period, the IT major's attrition rate increased to 17.3 percent compared to 16.9 percent in the June quarter. It saw net addition of 2,964 employees in the quarter. Overall, 12,168 employees joined Infosys and its subsidiaries during the second quarter. There are total 160,227 employees as on September 30, 2013 for Infosys and its subsidiaries.

Murthy, just after his return, had even announced an average increment of 8 percent for India employees in July. For employees outside India, the hike was at 3 percent. 

However, rate at which employees are leaving the company is worrisome.

(Read full management interview here).

The quarter also saw some high level management exits following Murthy's comeback. Infosys lost sales head Basab Pradhan who joined a startup while North America financial services head Sudhir Chaturvedi had quit to joined NIIT Technologies.

Other key management who made an exit during the period also included head of North Americas Ashok Vemuri, who joined rival iGate.

Analyst Ankita Somani, Angel Broking expects to see the impact of losing senior management in the quarters ahead. "That apprehension definitely remains the same, though the company is saying that they have a leadership team totally intact. We want to see healthy results and consistent results coming in from Infosys," she said.

However, Rajiv Bansal, CFO of the company is optimistic. In an interview to CNBC-TV18, he said, cost rationalisation exercise actually will give the benefit to the subsequent quarters.

"We have started on the journey, a lot of changes were being done but the benefit will come in subsequent quarters.  The utilisation excluding trainees is still at 77.5 percent, it is still very low. Our net addition is only about 1200 employees during the quarter for Infosys. So if you look at the last few quarters our net addition has come down so that is the reason our utilizations are going up," he said.

Meanwhile, Infosys' second quarter net profit grew 1.4 percent quarter-on-quarter (1.6 percent year-on-year) to Rs 2,407 crore for the quarter ended September 2013, impacted by one-time visa settlement charge of Rs 219 crore.

Consolidated quarterly revenue jumped 15 percent sequentially (31.5 percent year-on-year) to Rs 12,965 crore, with the company attributing it to robust volume growth, stable pricing and strong client addition during the growth.

(Posted by Nasrin Sultana)