Murthy, who returned to Infosys as the executive chairman in June, told analysts from British multinational bank Barclays that employee motivation in Infosys has improved and recent senior-level exits would only have limited impact on the company's performance.
He said Infosys has a full bench of senior managers to fill in any gaps and secondly, most of the churn has been of the managers who were either not comfortable with the changed circumstance or for which the company thought that there was limited value addition. "There has been only a few exits of people who have left due to higher ambitions," the report quoted him saying.
After Murthy's return, six Infosys executives have left the company. While global sales head Basab Pradhan quit in July, global manufacturing head Ashok Vemuri quit in August. Stephen Pratt, head of Infosys utilities and resources vertical for North America, quit earlier this month.
The report said Murthy, 68, admitted that "Infosys' billing rate premium over peers is unlikely to return as customers are now more focused on near-term cash flows rather than total cost of ownership".
According to Barclays, Murthy indicated that cost optimisation could happen more quickly than the earlier guided period of 21 months with some early results visible by the March 2014 quarter. He said Infosys would not shy away from replacing bottom-ranking sales people with smarter local hires.
"It (management) also said Infosys' sales effectiveness needs to improve through a greater focus on performance management, training, proposal quality, and better internal systems and processes," the report said,
In June, Murthy said Infosys should focus on winning large technology outsourcing contracts in bread and butter segments such as software development, network maintenance etc. During the Barclays event, he said Infosys will focus on regaining its lost market share in this area, by submitting more proposals, improving its win rates, bringing in greater flexibility into pricing.
The Barclays report said Murthy admitted that Infosys needs to both improve its own systems and processes, as per the management, and in some cases improve the quality of its sales force.
Infosys been aggressively focussing on performance management, training and the proposal quality of its sales force and that internal systems and processes are being enhanced to provide a more real-time update to management, he said.
In June, Murthy returned with his son Rohan Murty and set up the chairman's office to make Infosys "desirable" once again. He announced a round of wage hikes for all Infosys employees and undertook large-scale organisational restructuring. Over the past two quarters, Infosys surprised investors with better-than-expected financial performance.
Barclays report said from FY11 to FY13, Infosys lost 360bps in its EBIT margin largely due to a significant increase in employee costs. "Although its revenue increased in this period by $1.36 billion to $7.4 billion, it came at the expense of $1.02 billion in higher employee costs. This needs to be corrected," it said.
Murthy said Infosys is now taking a more proactive role in improving employee morale, according to Barclays. It said in the past 2-3 years, as growth came off, senior management took significant cuts in their own compensation and downgraded other facilities like hotel and airline entitlements for the top management.
"Members of senior management are now meeting with employees every month, such as in discussions in the company's food courts," he said in the report.
Infosys stock closed at Rs 3307, down by 0.6% on the Bombay Stock Exchange.
