Murthy increases pay at Infosys, cracks whip and prepares war chest

After returning to Infosys, NR Narayana Murthy has made his first significant move on Thursday by announcing an unexpected round of wage increases for the company's 1.5 lakh employees.

Speaking at the town hall function, Murthy conveyed the decision of the company to give the staff a wage hike across the board, something most employees were not anticipating so soon given the declining growth in the last few quarters.

Infosys announced an average increment of 8 percent for India employees effective from 1 July. For employees outside India, the company said the increments will be 3 percent.

[caption id="attachment_871013" align="alignright" width="380"] Narayana Murthy. Reuters[/caption]

However, the announcement, came with some riders.

Murthy told the Infosys employees that "under performance will not be tolerated." He announced that the company will have new performance evaluation schemes and "non performers, bench will have to prove worth to continue at Infosys," reported CNBC-TV18.

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The executive chairman also said that his son Rohan Murty, who will work as his assistant, is not interested in becoming the CEO. He also said that he will continue to support SD Shibulal, Kris Gopalakrishnan.

Announcing his plans for the growth of the company, Murthy said, "Will continue to focus on end-to-end solutions. Focus on large deals will be rectified."

Murthy's plans don't end here. A Hindustan Times article noted that "Infosys - which has fallen behind rivals TCS and Cognizant - is putting together a war chest of Rs 2,400-3,600 crore to buy out IT companies in Europe in order to add capabilities in newer businesses."

The company has decided to use 10-15 percent of its cash reserves (of Rs 24,000 crore) for the buyout, a senior Infosys executive told HT. Though no takeover targets have yet been identified, reports say Murthy wants to acquire IT firms in the healthcare, automotive and defence sectors.

Meanwhile, the Securities and Exchange Board of India (SEBI) has sought details from Infosys about the board meeting held on the day founder NR Narayana Murthy was re-appointed to an executive role in the company. Infosys had not disclosed the information sought by the SEBI.

Market regulator SEBI routinely seeks clarifications from listed companies without citing reasons, and the requests for information are not necessarily an indication of an official investigation.

"SEBI has sought certain clarifications from us relating to the Board meeting held on June 1st and we have provided the same. We will fully co-operate with SEBI and provide all necessary information in this matter," Infosys said in the statement to Reuters on Friday.