The recent whistle-blower incident has yet again made tech major Infosys a divided house, which will not bode well for its ongoing client engagements and project executions across customer markets, Peter Bendor-Samuel, CEO at Texas-based management consulting and research firm, Everest Group, has cautioned.
“Infosys’ business performance won’t be strongly impacted if the company is not forced into a restatement of earnings as a result of the investigation. However, the company must bring an end to internal divisions. Its long-term performance will be adversely affected if the company goes back into a mode of looking for a new leader after every incident of infighting,” the Everest Group chief told The Hindu .
According to Mr. Bendor-Samuel, accounting for large deals is complex and there are several legitimate approaches. However, it is also quite possible that there may have been a premature recognition of revenue.
“If this is an indication that Infosys is descending back into the internal fighting, which undermined it during Vishal Sikka’s tenure, then investors have a reason for real concern,” he added.
Most clients are aware of the new development at Infosys. “Infosys has sent out emails to everyone stating that they are looking into the matter and that a third-party auditor has been brought in to investigate,” said Hansa Iyengar, senior analyst, Advanced Digital Services, at London-based data research and consulting firm, Ovum.
According to Harit Shah, research analyst, Reliance Securities, the market has become extremely competitive for IT services in the last three years. An unfavourable macro situation has put a lot of delivery pressure on listed companies.
Ms. Iyengar said Oct.-Dec. had always been a slow quarter for vendors because of the holiday season in the U.S. and U.K. and other Western markets.
“So we should not be reading that as a negative effect of this particular incident,” she added.
