Best Corporate Governance - Infosys 4o3s4j

INSTITUTE OF PROFESSIONAL EDUCATION AND RESEARCH, BHOPAL

PGDM Trimester-V Batch 4th (2012-2014) Business Ethics Case Analysis Infosys

Submitted To:

Submitted By:

Prof. Gazal Sharma

Saijeeth Vasudevan

Infosys

Technologies

Ltd.

(NASDAQ: INFY) was started in 1981 by seven people with US$ 250. Today, it is a global leader in the "next generation" of IT and consulting with revenues of over US$ 4 billion. Infosys

defines,

designs

and

delivers

technology-enabled business solutions that help Global 2000 companies win in a Flat World. Infosys also provides a complete range of services by leveraging our domain and business expertise and strategic alliances with leading technology providers. Infosys' service offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing. Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the industry leading to the rise of offshore outsourcing. The GDM is based on the principle of taking work to the location where the best talent is available, where it makes the best economic sense, with the least amount of acceptable risk. Infosys has a global footprint with over 50 offices and development centers in India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan. Infosys has over 103,000 employees. Infosys takes pride in building strategic long-term client relationships. Over 97% of our revenues come from existing customers. Vision “To be a globally respected corporation that

provides best of-breed business solutions,

leveraging technology, delivered by best- in-class people”. Mission

“To achieve our objectives in an environment of fairness, honesty and courtesy towards our clients, employee’s vendors and society at large”. Its business activities are anchored in three pillars of corporate behavior, Viz., Business Ethics, Corporate Governance and Corporate Social Responsibility.

Corporate Governance Corporate Social Responsibility

Business Ethics

Infosys’ business activities are anchored in three pillars

Value System at Infosys Technologies

Customer Delight

Leadership by Example

Integrity and Transparency

Fairness

Pursuit of Excellence

• A commitment to suring customer expectations. • A commitment to set standards in the business and transactions • To be an exemplar for the industry and their own times • A commitment to be ethical, sincere and open in their dealings • A commitment to be objective and transactionoriented, thereby earning trust and respect.

• A commitment to strive relentlessly, to constantly improve themselves, their teams, services and products so as to become the best.

Business ethics at Infosys 

Placed principles of work ethics and a whistle blower policy.



Infosys started sexual harassment cell “call ASHI” (Anti Sexual Harassment Initiative), to provide an environment free of harassment.

Corporate Governance at Infosys Corporate Governance: A system of checks and balances between the board, management and investors to produce an efficiently functioning corporation, ideally geared to produce long-term value. The Infosys Technologies believe that the Board of Directors is at the core of corporate governance practice. Oversees how management serves and protects the long term interest of all stakeholders. Active and well informed and independent board is necessary to ensure highest standards of corporate governance. 8 out of 15 board of directors are independent . This shows that Infosys is committed to long-term shareholder value. Infosys has audit, compensation, investor grievances, nominations, and risk management committees which comprises only independent directors. Furnish in the annual reports about its compliance with the corporate governance guidelines of six countries in their national languages. The company comply with Euro shareholders corporate governance guidelines, 2000. The recommendations of The Conference Board Commission on public trust and private enterprises in the US. The company also adheres to the UN global compact programme. Corporate Social Responsibility Initiatives of Infosys At Infosys, the distribution of wealth is as important as its legal and ethical creation. A strong sense of social responsibility is therefore an integral part of its value system. Mr. Narayana Murthy: “For me corporate governance is a mindset, a question of value systems. It is a way of saying that I put public good ahead of private good; of not using the corporation's resources for personal benefit. As a society becomes more and more evolved, what appears in the realm of ethics automatically enters the realm of the legal framework.”

Infosys Foundation: Established in 1996, s programs and organizations devoted to the cause of the destitute, the rural poor, the mentally challenged, and the economically disadvantaged sections of the society. Community service: Through its Computers@Classrooms initiative launched in January 1999, Infosys donated 2,567 computers to various institutions across India. Environment: Infosys is engaging with global thought leaders and decision-makers in debate and actionable programs to identify and drive the implementation of sustainable ways to manage the consumption of energy and resources. The efforts begin right at home, through Project Ozone. Social commitment in education: Infosys' Education & Research group has the pride of anchoring the Infosys Extension Program (IEP), which consists of the Infosys Fellowship Program, Rural Reach program, Catch Them Young and Train the Trainer. Sustainability Report: Infosys has published its first Sustainability Report, 2007-2008. In accordance with the Global Reporting Initiative (GRI) framework, the report encapsulates the company's economic performance, innovation in offerings, people engagement, and corporate social responsibility initiatives, and has been awarded an A+ rating by the GRI. Corporate Governance achievements 

In 2000, the company was conferred the National Award for Excellence in Corporate Governance by the Government of India.



The Business World — IMRB Survey ranked Infosys number one among the most respected companies in India, in 2001.



It was voted as India’s best managed company for 6 years in a row, between 1996 and 2001 by the Asia Money Poll.



In the year 2000, in the survey of Far Eastern Economic Review, Infosys was selected as one of Asia’s leading corporations and was ranked first as “The Company that Others Try to Emulate”.



The company was voted “India’s Most ired Company” in Economic Times in 2000.



In 2003, Infosys Technologies co-founder and chairman, Mr. N. R. Narayana Murthy, won the Ernst & Young World Entrepreneur of the Year award for his company’s

“outstanding financial performance and global impact in a dynamic and volatile industry”. 

Infosys Technologies has won the prestigious “Global Most-ired Knowledge Enterprises (MAKE)” Award, for 2004.



Infosys Technologies made a winning sweep in the Business World “Most Respected Companies’ Award” 2004.



It is awarded First position in SAFA (South Asian Federation of ants.)



Best Presented s Award 2004 in the Communication and Information Technology Sector based on the evaluation of the Annual Report of the company.



“Best Annual report” award from the Institute of Chartered ants of India for the 10th successive year.



Infosys topped the regional rankings for best Corporate Governance in Asia Money’s Corporate Governance Poll.



It has also received National award for Excellence in Corporate Governance from the Institute of Company Secretaries of India

 

The latest Business Today—AT Kearney study conducted in March 2005 placed Infosys Technologies as “India’s Best Managed Company”.

Corporate Governance Ratings CRISIL: CRISIL assigned “CRISIL GVC Level 1 “rating to Infosys. This Governance and Value Creation (GVC) rating indicates capability to create wealth for all our stakeholders while adopting sound corporate governance practices. ICRA: ICRA assigned CGR 1 rating to corporate governance practices of Infosys. The rating of CGR 1 is the highest on ICRA’s Corporate Governance Rating (CGR) scale of CGR 1 to CGR 6. Infosys is the first company to be assigned the highest CGR by ICRA. TNS Survey: Ranked “1” in the category of “Good reputation index” As a part of their commitment to follow global best practices, they comply with the Euro shareholders Corporate Governance Guidelines, 2000, and the recommendations of The

Conference Board Commission on Public Trusts and Private Enterprises in the U.S. They also adhere to the UN Global Compact Programme. Conclusion The relation between corporate governance and organizational performance is of fundamental importance to practitioners, academics and policy makers. Assumptions and strongly held beliefs about the importance of governance are shaping the current regulatory climate for the design of governance structures. From the case it is clear that a very high positive relationship between level of Corporate Governance and market valuations of the company which indicates that superior governance results in better valuations. Companies with high governance rankings enjoy superior market s. To sum up: 1. Better corporate governance is associated with higher operating performance and higher valuations. 2. Firms could improve investors’ wealth and protection rights by increasing disclosure, selecting well-functioning and independent boards, imposing disciplinary mechanisms. 3. Better Corporate Governance leads to value creation for all the stakeholders. Q1. Ans. Value Systems at Infosys Technologies is the reason behind the success of Infosys. The company has developed C-life principle of core values that puts into practice in all aspects of its business activities. This value system made Infosys India’s most ired company.

Customer Delight

Pursuit of excellence

Leadership by example C - LIFE

Integrity & transperancy

Replacing obsolete technology regularly to remain at the cutting edge.

Diversifying income sources to minimize risk of revenue, that is, setting limit to contributes from one client, one technology and one industry.

Complying with ing standards ensuring strictest adherence to corporate governance.

Fairness

Giving employees a world class environment to work and learn.

Emphasizing constantly on quality by benchmarking against the best processes in the world.

All of these factors have contributed to Infosys Technologies remaining India’s most ired company. Q2.

Ans. Infosys has intense focus on people and their skills. This focus has got intensified over the years. Infosys’s focus on people is a natural corollary of its growing business with customers identifying this as a quality that distinguishes Infosys from its competitors in the IT services sector. Infosys learnt that its employees must be best across the globe so as to transform itself into a global enterprise. In 2003-2004, it recruited 10000 people from over a million applicants, this shows that how intense people centric Infosys is. They wanted to select right person for the right job so that the employees can deliver their best and also their motivation level will be high as well as they will be satisfied as they will get work according to their skill sets. Customers

US $20.2 billion*

Market Capitalization

Q3.

538*

Ans. The success of Infosys is directly attributed to the steady commitment to the ethical trilogy of business ethics, corporate governance and corporate social US responsibility and these $4,176 million** Revenue commitment is connected to the value system (C-life principle of core values) which is followed in the Infosys. The stakeholders, shareholders, society all were satisfied with company because US $1,155 million** Infosys has steady commitment to the ethical trilogy. This ethical trilogy increased their revenue, Net income helped the society to develop and also the transparency made in the company created a good image of company in the labor market and the company was the most ired company. 63 cities across 26 countries Global presence 91,187* Employees Company

Started in 1981with seven founders, US $250, and a dream

Steps taken by Infosys for fulfilling their commitment on ethical trilogy: 

Infosys Technologies has disclosed a Code of Ethics for its finance professionals and a whistleblower’s policy to encourage and protect employees, willing to share information on frauds, but who choose to remain anonymous.



The Code of Business Conduct and Ethics helps the company ensure compliance with legal requirements and the company’s standard of business conduct. The code deals with aspects of employees’ responsibilities to the company and its stockholders.



Infosys has set new and effective standards in communicating with shareholders, stock exchange and the general public.



Its annual report is said to be a trend-setter with respect to the disclosure norms evidenced by the complete length and detail of the report.



Infosys fundamental objective of corporate governance is the enhancement of long term shareholder value while, at the same time, protecting the interests of other stakeholders.



Infosys established the Infosys Foundation with the philosophy “It is better to light the candle than remain in darkness”.



Infosys also instituted Infosys Fellowship Programme to promote excellence in education and offered funds for PhD programmes in computer science, management, law and ing.