Tuesday, 22 September 2015

Brain drain a pain as Infosys stops hiring SAP executives

https://ibsintelligence.com/With the news of 16 SAP executives moving to Infosys, the issue of sudden staff departures has come under the spotlight. The fear of a brain drain to businesses and even countries is the stuff of nightmares. All that lost talent, investment and time.

In January this year, the hipster-friendly British newspaper The Guardian reported that 200,000 young Greeks left their financially-stricken country in search of jobs and a new life. That made some kind of sense as they had nothing to lose.

While a few years ago, the US-based cloud-computing company Rackspace found itself in a losing battle to hold on to technical staff. If someone’s offered a better wage, they’ll seriously consider it.

These are two scenarios out of thousands. You’ll know more and probably have your own personal experiences.

It could also be argued that being loyal to a company is never the smartest move. Firms around the world ditch staff at the first sign of trouble. 

Just look at falling oil prices – within days of the decline, 40,000 oil and gas jobs in Aberdeen in Scotland were under risk. All that profit accumulated over years, yet the oil and gas companies were saying thanks and goodbye. If a company doesn’t stick by you during the bad times, why return the favour?

In the world of banking software companies, it’s no different. People come and go with about as much emotional impact as a badly-written Hollywood movie.

Onto Infosys and SAP – two well-known companies who have a history of being friendly to each other; but can also be competitors in some areas.

Currently, it’s all at the rumour stage, but Infosys has stopped hiring SAP’s top executives till the end of the year to avoid damaging their relationship and causing a brain drain.

A caveat here – this is all according to sources. 

Vishal Sikka, Infosys’ chief executive, who worked at SAP, is allegedly asking search firms to not consider senior executives at his old company.

Sikka, a former SAP board member, joined Infosys in 2014 and since that time 13 senior executives from the German company have been recruited. 

However, an unnamed executive ‘familiar with the development’ spoke with news site Livemint and says Infosys is keen not to ‘spoil this relationship’ with SAP and wants a ‘go slow’ on recruiting till the end of 2015. 

SAP is seen as a ‘strong partner’ for Infosys – the latter calls SAP a ‘global services partner’, and Infosys hails their ‘collaboration’ on SAP products. I’m not sure how many group hugs they have per year, but they clearly get on.

Yet things could be changing. Another source says SAP’s current management has expressed its ‘displeasure’ with Infosys. So it looks like tension has creeped in. 

Livemint contacted Infosys and SAP, and two executive search firms Heidrick & Struggles and Egon Zehnder, who all declined to comment. That’s never a good sign. If you’re greeted by a wall of silence or people ignoring the issue, it sets alarm bells ringing. 

In terms of the halt on recruitment, a total of 16 executives have jumped ship – 13 of them classed as senior executives. Out of those 16, Livemint says 9 of them joined Infosys at a lower rank. We’re not sure why they did that – but perhaps they sense they can move up quickly with a new firm. Perhaps more opportunities exist?

Or perhaps this has something to do with SAP’s financial services business reducing its headcount – despite its bullish statements on business proliferation – by offering redundancy to those with at least ten years of service (and granted to one or two of those with less, who have asked)? 

To put all of these numbers in perspective, Infosys has almost 200 senior executives, including 14 executive vice-presidents, 20 senior vice-presidents, and 160 vice-presidents.

Livemint hasn’t got the monopoly on this type of news. The issue of SAP’s exodus to Infosys has been flagged by IBS Journal on a number of occasions.

A prominent ex-SAP addition to the Infosys team is Michael Reh, who is leading the banking technology business unit, while our ‘On the move’ section in the June print issue edition says: ‘Yet another former SAP executive has joined Infosys. Yusuf Bashir has been appointed by Infosys to oversee its $500 million start-up fund.’

Our May issue reported that Anirban Dey, former head of SAP Labs India, became global head of Infosys’ recently established subsidiary, Edgeverve – which back in March 2015 was rumoured to be merging with Infosys’ Finacle unit. And this was confirmed to be true later in the year.

So don’t ever think rumours come to nothing.

By Antony Peyton, Senior Reporter, IBS Intelligence

Visit www.ibsintelligence.com for news, case studies and other features related to the fintech industry.

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