SPLICING THE TRUTH

These 6 charts explain why Infosys and the media disagree on everything

Quartz india
Quartz india

Infosys, India’s storied software exporter, has slapped legal notices on three newspapers seeking Rs2,000 crore ($338 million) from each in damages. The stories “have caused and continue to cause grave and irreparable damage, loss, harm and disrepute to Infosys,” the company says.

Once a darling of the media, Infosys has been getting bad press of late. Obviously, its management has a different take on the state of its business. Here are six charts that explain how they’ve come to such different conclusions.

1) Growth

What Infosys says: “We have done creditably this year by doubling our revenue growth to 11.5% (in US dollar terms).” – N.R. Narayana Murthy, Infosys annual report 2013-14

What the journalists say: Its growth rates are slower compared even to bigger rivals—without any exception in the last four quarters.

Quarterly-growth-rates-Infosys-TCS-Cognizant_chartbuilder

2) Clients and revenues

What Infosys sees: The number of active clients is 890 in fiscal year 2014, up from 798 a year ago. The number of million-dollar clients: 501 in 2014, compared to 448 a year earlier. Number of $100 million clients 13, one more than last year.

What journalists see: Incremental revenues declining in the last few quarters, and a laggard compared to rivals.

Quarterly-Incremental-Revenues-m-Infosys-TCS-Cognizant_chartbuilder (1)

3) Core business growth

What Infosys says: “During the last two years, our focus on the third stream [business operations such as application development, maintenance and testing; the other two streams are consulting and products] was blurred. We have to refocus on this (our bread and butter business) in the short-term while also ensuring that we accelerate our progress in the first two streams in the medium to long term.” – NR Narayana Murthy in AGM for FY 2013

What journalists see: The growth rate of to so-called bread and butter business, operations and testing, has been choppy

Third-stream-s-choppy-growth-Total-revenue-Business-operations-Business-Operations-Growth-Rate_chartbuilder

4) Talent management

What Infosys says: “I have travelled to our markets and our campuses, spoken to a large number of Infoscions, answered their questions, addressed their concerns, encouraged their enthusiasm, and lent support to their enormous zeal to achieve aspirational goals. The enthusiasm, commitment, energy and hard work of every Infoscion to achieve our goals are evident.” – N.R. Narayana Murthy, annual report 2013-14

What journalists see: Rising attrition rates. And Murthy might not be able to do much about it, unless he makes Infy grow faster. As author Phil Rosenzweig argues in Halo Effect and Other Managerial Delusions, financial performance of a company has a stronger impact on employee satisfaction than the other way round.

Revenue-Attrition-Attrition-Revenue-Growth_chartbuilder

5) Churn

What Infosys says: “Barring a few exceptions, most people that left us were not adding critical value to the company.” – Naryana Murthy at an investor conference on March 12.

What the journalists see: A steady exodus of senior executives. Red dots represent a senior executive quitting—plotted against the share price movements from Google Finance.

6) CEO performance

And, finally, without splitting sides: CEO S.D. Shibulal’s approval rating within Infosys since founder Narayana Murthy came back, according to Glassdoor.com, the jobs portal where employees can anonymously rate managers.

CEO-Approval-Rating-Shibulal-s-rating_chartbuilder

What journalists write is often at odds with how the top management view their company for a number of reasons. Managers tend to focus on efforts, while journalists tend to look at results. The reality is it takes time for efforts to yield results.

Murthy said efforts to bring down costs will take 6-18 months to show results, to improve sales will take 9-21 months, and to make software delivery more effective will take 18-36 months. Indeed it is hard for outside observers to get a sense of control that those in the drivers seat—with their hands in the steering wheel and legs on brake and accelerator—feel. Change is chaotic.

Given this, the answer might seem obvious: more communication. Of course, Infosys’ website has transcripts of all press and investor conferences.

But short-term numbers tend to speak louder than all these. That’s why companies under transformation go private, or consciously get off quarterly reporting treadmills, or hire a boss with a reality-distortion-field strong enough to tune out the calls for short-term results.

It’s not clear if sending out legal notices will do the job that effectively.

You can follow Ramnath on Twitter at @nsramnath.

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