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Excerpts
Risk identification Contd...
Legal and Statutory Risks
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Contractual Lliabilities
Infosys had an elaborate review and documentation process for contracts. The
company evaluated the legal risks involved in a contract and ascertained its
legal responsibilities under the applicable laws of the contract. Infosys
restricted its liabilities under the contract and covered the risks involved to
the extent possible. Infosys had also taken sufficient insurance cover abroad to
cover possible liabilities arising out of non-performance of contracts. The
management reviewed this on a continuous basis and took corrective action. In
general, Infosys did not enter into contracts that had open-ended legal
obligations...
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Human Resources Risks
Manpower Development
Infosys considered people to be its key resource. The company had attempted to
create a favorable work environment that encouraged innovation and rewarded
merit. The company had developed a strong reputation for attracting engineers
from India's most famous campuses.
Employees seemed to trust Infosys, as it did not sack any employee even during
the peak of the IT slowdown. People were kept on the 'bench' for months but none
were sacked. Infosys' attrition rate in 2002 was only 7.6% in an industry noted
for high employee turnover...
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Operational Risks
Infosys believed risk management processes at the
operational level were a key requirement for reducing uncertainty in
delivering high-quality software solutions to clients within
budgeted time and cost. Infosys used quality models such as the
Software Engineering Institute's Capability Maturity Model (SEI-CMM)
to ensure that risks were identified and measures taken to mitigate
them at the project planning stage. Infosys' software development
processes received Level 5 CMM certification. Only a few companies
in the world had achieved this distinction. Infosys had guidelines
for project leaders and module leaders on how risks could be
identified and mitigated... |
Financial Risks
Foreign Currency Rate Fluctuations
Infosys derived its revenues from 31 countries around the world. 87.7% of
revenues in fiscal 2002 were dollar-denominated. All contracts were denominated
in internationally tradable currencies. Infosys believed its exposure to local
currencies, that were not tradable or which might depreciate sharply, was
minimal...
Exhibits
Exhibit I: InfosysBusiness Segment Contribution to Revenues
Exhibit II: InfosysClient Concentration
Exhibit III: InfosysGeographical Concentration
Exhibit IV: InfosysProportion of Revenues from Various Domains
Exhibit V: InfosysCustomer Classification within the Telecom Segment
Exhibit VI: InfosysAttrition Rates
Exhibit VII: InfosysDepreciation Expense and Software expense as a Proportion of
Revenues (Indian GAAP)
Exhibit VIII: InfosysTechnology Related Data
Exhibit IX: InfosysForeign Currency Receipts and Payments
Exhibit X: InfosysLiquidity Position of Infosys based on Indian GAAP
Exhibit XI: InfosysUsing Systems & Processes to Manage Risk
Exhibit XII: An interview with Nandan M Nilekani, CEO, Infosys
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