(Corrects time frame of staff departures in paragraph 2)
* Infosys seen posting 18 pct growth in Q4 net profit,
* Staff attrition highest among India's top-3 IT outsourcing
firms since Murthy's return
* CEO Shibulal to retire by January; latest senior executive
* External hire as next CEO could be good for Infosys -
By Nivedita Bhattacharjee
MUMBAI, April 11 An exodus of senior executives
and staff at India's second largest IT outsourcing firm, Infosys
Ltd, could hamper efforts to win lucrative contracts
in the United States and Europe, and weigh on its profit growth
outlook for this year.
Nearly a fifth of the workforce had left the company in the
quarter ended December following the return from retirement of
founder N.R. Narayana Murthy in June to turn around the company
after a string of disappointing results. So far, nine senior
executives have left.
Infosys has the highest attrition rate among India's
top-three IT outsourcing firms. The senior management changes
make Infosys "highly susceptible" to miss out on an expected
pick-up in growth in India's $100 billion software services and
outsourcing industry, said broker Ambit Capital.
On Friday, Infosys said it started looking for a new CEO in
preparation for the retirement of S.D. Shibulal early next year,
and appointed advisory firm Egon Zehnder to assist a committee
in identifying external candidates.
All four of the company's CEOs are its original founders, a
structure that investors have blamed for the loss of market
share in recent years.
"Absolutely, the high staff turnover creates concerns about
the growth outlook," said Walter Rossini, a Milan-based
portfolio manager for Gestielle India, which manages Indian
stocks worth about $200 million, including shares in Infosys.
"It's creating uncertainty about its strategy. Who will help
Murthy implement his strategy?"
Murthy has vowed to take tough decisions to boost growth and
restore Infosys's fortunes over the next three years, refocusing
the company on winning large outsourcing contracts.
India's outsourcing sector relies on U.S. and European
companies for about three quarters of its revenue.
Infosys is expected to post a modest 18 percent rise in
January-March net profit on Tuesday, lagging sector leader Tata
Consultancy Services Ltd, which is expected to say its
quarterly profit jumped almost 44 percent.
For the current year to end-March 2015, most analysts polled
by Reuters expect Infosys to forecast revenue growth of 8-10
percent, underperforming the IT outsourcing sector's export
growth rate of 13-15 percent.
Murthy said last month revenue for the current year could be
at the lower end of the company's 11.5 to 12 percent growth
R.K. Gupta, managing director at Mumbai-based Taurus Asset
Management, which owns Infosys shares, said Shibulal's departure
next year could force Infosys to bring in outside expertise. "I
think new blood and new ideas is needed ... that can sometimes
only come from a person who has a broader view of the industry,"
he said. "When you spend a long time with one company you have
loyalty, but sometimes your ideas get old."
(Editing by Sumeet Chatterjee and Miral Fahmy)