Infy may be back with stock option plans

The company says operational efficiency paying dividends; bags six $50-mn deals in 10 months

Infosys, India’s second-largest information technology services company, is looking at various means to incentivise employees and sales force, including introducing a employee stock option plan.

The Bengaluru-based company is focusing on improving operational efficiency in order to get back the industry-leading growth rate.

Speaking at the BofA Merrill Lynch Global Tech Conference on Wednesday, Vishal Sikka, the chief executive and managing director, said such a plan is on the anvil.

“On the sales side, we have the incentivisation plan. It has to be tweaked a little bit . . . and we will make the incremental changes as we go along. We are also looking at introducing a stock option plan, and are in the process of hiring a new human resource head,” he said.

Infosys, one of the first companies to introduce employee stock option plan, had discontinued the practice long time ago.

However, it has a 2011 restricted stock units plan that provides grant of stock options to eligible employees.

The proposal was approved by shareholders in October 2011 through a postal ballot. The maximum aggregate number of shares currently held by Infosys Employees’ Welfare Trust is 5,667,200.  

Last year, Infosys awarded 27,067 RSUs to Sikka, who joined in June 2014. Sikka said the operational rigour the company has brought in terms of effective management of key accounts, enhancing sales effectiveness and account mining has started to pay dividends.

“We have significantly improved our win percentage in the last couple of months. Just in the last 10-12 weeks or so, we have won six major deals of more than $50 million each, and this has been a result of these kinds of initiatives,” he said.

Talking about the company’s growth outlook for FY16 as well as the vision 2020, Sikka said in the short-term, he expects growth to be driven largely by operational efficiency and expects newer initiatives’ focus on innovation and next generation technologies, like automation and artificial intelligence, to start showing results towards the second half of the year, which are traditionally soft.

“This year, we are expecting that in the second half also, there will be more contribution from innovation and things of this nature. So we feel confident about (achieving) the 10-12 per cent (revenue growth) guidance we have given (for FY16),” he added.

In terms of newer geographies, Sikka said the company is expecting many of the European countries, especially Germany and France, to show good growth. Germany, he said, is a Euro300 million market for the company which “can easily be a Euro1 billion business for us in next few years because of the great opportunity to transform manufacturing and digital”.

Infosys presently employs around 1,200 people in Germany.

Similarly, he said China also has a greater potential for growth which can grow 20 times and become a $1 billion business over the next few years.

Image: Vishal Sikka and Infosys Founder N R Narayana Murthy at the Infosys Science Foundation Awards ceremony in Kolkata; Photograph: Indrani Roy/Rediff.com