Will Narayana Murthy deploy better performance measures to up productivity of Infosys?

Will NR Narayana Murthy implement stricter performance measurement methods to improve productivity of Infosys.

After seeing the quarterly result, the expectation of IT analysts in India is the need for tighter performance monitoring under the new executive chairman.

Infosys has already indicated that it will restructure top team to improve performance.

“We expect the company, under the leadership of Murthy, to take steps to further improve employee engagement. We also expect the company to implement stricter performance measurement methods, which may lead to an improvement in the productivity levels of the company, going ahead. These measures should yield higher revenue and profit growth over the next few quarters,” said Dipen Shah, head of Private Client Group Research, Kotak Securities.

IT major Infosys has posted 0.5 percent increase in net profit to $418 million in the April-June quarter compared to the same period last year.

Net profit declined 5.9 percent sequentially.

The IT major’s dollar revenues rose 13.6 percent to $1991 million in the June quarter over the same period last year and rose 2.7 percent sequentially.

Infosys has maintained its FY14 dollar revenue guidance unchanged at 6 percent to 10 percent.

“The 4.1 percent volume growth and 3.4 percent constant currency growth were the highlights of the quarter. The better-than-expected revenue growth resulted in margins also coming in slightly ahead of expectations. The company has also increased the guidance on a constant currency basis, which is a positive,” Shah added.

In rupee terms, the company’s net profit grew 3.7 percent to Rs 2,374 crore in the April -June quarter, but declined 0.8 percent sequentially. The company revenues grew 17.2 percent to Rs 11,267 crore in the June quarter and rose 7.8 percent sequentially. The company’s rupee revenue for 2014 financial year is expected to grow 13 percent to 17 percent.

Infosys and its subsidiaries added 66 clients during the quarter. It added 10,138 (gross) employees (net addition of 575) for the quarter. It has 157,263 employees as on June 30 including its subsidiaries.

“Despite facing an uncertain macro environment, changing regulatory regime and a volatile currency environment, we have done well in Q1 and are cautiously optimistic about rest of the year,” said S D Shibulal, CEO and managing director.

The IT major reported an increase in employee utilization rate for the first quarter ended June 30.

Infosys saw attrition of 16.9 percent in the first quarter, compared with 16.3 percent during the previous quarter. Attrition was 14.9 percent in the comparable year-ago period.

Utilization rate for Infosys was 72.4 percent in first quarter, up 1.5 percent sequentially.

The number of net hires was 575 for the first quarter, down from 1,059 in the previous quarter. The net hire number was 1,157 in the year-ago period. On the lateral hiring front, the company roped in 3,008 employees, while the preceding quarter saw it hiring 3,545 employees.

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