Sexual Harassment at Infosys

 
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Case Details:

Case Code : BECG022
Case Length : 12 Pages
Period : 1999 - 2001
Pub. Date : 2002
Teaching Note :Not Available
Organization : Infosys
Industry : Information Technology
Countries : India

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"The defendants (Phaneesh Murthy and Infosys) caused the plaintiff (Reka Maximovitch) to be subjected to verbal sexual harassment, to unwanted sexual advances, and to visual sexual harassment. Said sexual harassment and sexual advances were unwelcome. The defendants failed to take reasonable steps to keep harassment from occurring and recurring." 1

- Excerpt from a complaint filed by former Infosys employee Reka Maximovitch in the Alameda Superior County Court, Oakland, US, in December 2001.

"Since its inception, this is probably the first piece of negative news about Infosys."

- Hindu Business Line, August 07, 2002.

The Fall of a High Priest

This is a story of blackmail, sex, stalking, threats, oppression, hurt feelings and revenge. Interestingly, all this happened in and around the US offices of Infosys,2 one of India's most well-known and respected software companies, between October 1999 and December 2000.

As a result, Infosys became entangled in a scandal, that dented its reputation as a company that had the best corporate governance structure in the country. The events that took place during October 1999 and December 2000 became public knowledge in India only when Phaneesh Murthy (Phaneesh), the head of the sales and marketing, and communication and product services division of Infosys (and a director on the board), resigned from his post in June 2002. Phaneesh said that he had resigned in order to focus on fighting a lawsuit filed against him in the US. The lawsuit, filed by his former secretary, Reka Maximovitch (Reka) alleged that Phaneesh had sexually harassed her and unlawfully terminated her employment. The company's share price declined by 6.6% soon after Phaneesh left.

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The case attracted a lot of media coverage since a sexual harassment lawsuit implicating such a senior official had never been heard of in the Indian corporate world. It was also being seen as an event that could make Indian companies stop ignoring the sensitive issue of sexual harassment at the workplace.

While sexual harassment of female employees was prevalent in the country, it was either not reported or ignored. Either the victims kept quite due to fear of social ridicule and fear of losing their jobs, or the matter was somehow hushed up by the management. The stance adopted by Infosys in this case seemed to go against its image of a company considered to be a model of good corporate governance. Analysts claimed that the company had kept the issue under wraps for a long time. Media reports blamed Infosys for neglecting to formulate/implement a structured policy regarding sexual harassment and for compromising on moral values for an 'economically-valuable' person like Phaneesh.

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1] 'Infosys Lawsuit Settled Out-of-Court?' www.rediff.com, August 20, 2002.

2] The Bangalore (Karnataka) based Infosys is a leading consulting and information technology services company that provides business consulting, systems integration, application development and product engineering services to Fortune 2000 companies. The company has over 15,000 employees in over 30 offices worldwide and is the second largest exporter of software in India. For 2003, it recorded a total income of Rs 36.23 billion and a net profit of Rs 9.58 billion (in June 2003, Rs 47 equaled 1 US $).

 

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