Infosys is looking to cut costs by $100-$150 million this financial year as it hires freshers to diminish employee costs and rejigs roles for middle and senior management, a top company executive said at an analyst meet.
The company’s margins have dropped significantly under CEO Salil Parekh, as it raised investments to drive growth.
The company is, however, now looking at greater cost savings, since a major lump of its investments has been completed.
“There are 21 tracks we are looking at for cost-optimization. We are targeting $100-$150 million in cost savings as the year goes on,” chief financial officer Nilanjan Roy said on Wednesday.
Roy said the firm was focused on improving the bottom-end of its pyramid, which had become more barrel-shaped, by hiring freshers.
It was also looking to recreate the pyramid onsite through fresher hiring, he added.
Infosys has hired 1,700 freshers in the US and Europe in the past year.
Roy said the company would move to an asset-lite model for new infrastructure.
Analysts said the cost optimization plan was a routine move aimed at reducing wage costs by hiring more freshers.
“Cost optimization happens every year through one or other measures. It is not that such a saving is new. They have used wage rationalization by hiring freshers in the past. But it is good that the company has quantified it this time, and that gives a little bit of comfort in profitability,” said a senior IT sector analyst with a brokerage firm.
The company, however, said it had no plans for layoffs. “There is no planned layoff. We have performance reviews, and people who are not performing are asked to leave. This is normal, there is no targeted layoff,” chief operating officer UB Pravin Rao said.
On October 11, Rao told analysts that the attrition in the second quarter for tech services — both voluntary and involuntary — was about 19.4%. “If you look at voluntary alone, it is about 18%,” he said.
Voluntary attrition is when people leave the firm for other opportunities, while involuntary is forced.