Infosys re-launches employee stock option to contain attrition

In a bid to rein in rising attrition that stood at 21 percent in the April-June 2016 quarter, Infosys has re-launched employee stock option plan (ESOP) for junior to middle-level management staff, more than a decade after the company withdrew it.

Although the company, which cut its revenue estimate for next year recently said, is not “unduly concerned” about the jump in attrition—17.3 percent in the quarter ending March, and 19.2 percent in the year-ago period.

“Today, we re-launched our ESOP program after a gap of about 13 years. We are rewarding about 7,500 of our employees from junior to middle-level management with restricted stock options and we will extend it to middle management to senior leaders and title holders subsequently,” Infosys Chief Operating Officer UB Pravin Rao said. He added that the company continues to focus on re-skilling employees and has also revamped its leadership development programs.

For starters, ESOPs allow employees to own equity in the company, which is seen as a morale booster for them, and thus an accepted retention policy. Infosys had 197,050 employees at the end of June 2016.

Rao said that one of the reasons for increased attrition is seasonality, because typically in Q1, “we have higher exits due to higher studies”. However, the company claims that while the attrition levels have shot up, it has been able to retain high performers. “We also track high performers’ attrition, which has come down to 11.2 percent from 13.4 percent in a single quarter,” Rao said.

However, Infosys has seen a string of senior leaders exit the firm. These include former chief financial officer Rajiv Bansal, head of manufacturing and EVP (Executive Vice-President) Sanjay Jalona, Infosys BPO head and EVP Gautam Thakkar, and Infosys EdgeVerve head and EVP Michael Reh. The most recent exit was that of Samson David, Infosys’ head of cloud, infrastructure and security business.

This year, Infosys gave an increment of 6-12 percent to its employees in India and about 2 percent to onsite workers, apart from offering equity to incentivize top performers.