Human Resource Management: Best Practices in Infosys

Technologies

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.
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. In the 'Best
Employer' survey conducted by Dataquest7-IDC8 in the year 2006, Infosys was adjudged the
'Dream Company to Work for.'
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. 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.
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. 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.
Background Note
Infosys was incorporated as Infosys Consultants Private Limited on July 02, 1981, by a group of
seven professionals. 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...