Flat or negative growth for IT sector in 2020 due to Covid-19: Infosys CFO

India's information technology sector is expected to post either flat or negative growth in 2020 due to the impact of the Coronavirus pandemic globally, an IT industry veteran said onSaturday.

"Look at the economic activity (globally). Worse than what you have seen in 2008 (global financial crisis).

So, clients (of Indian IT companies) are not going to increase spending (on IT) or even maintain the current spending," the former Chief Financial Officer of IT major, Infosys Ltd, V Balakrishnan told PTI.

There will be cut in spending, and could be pressure on pricing because all the major industries including retail and financial services have been adversely impacted, he said, also noting surging unemployment rate in the US.

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"Economies are doing badly. Spending is not going to happen. I think this year is going to be tough for the IT industry," Balakrishnan said.

The Coronavirus pandemic is like a force majeure, and no amount of business continuity planning will help in this situation, he claimed.

"They (Indian ITcompanies) have to work closely with their clients, figure out how much they can extract; at the same time, they have to keep the cost under control, and manage the current year because in current year if they have a positive growth, that will be a surprise." "It will be either flat or negative growth this year because everything is happening in the first two quarters, when growth is always good. This year is going to be very tough.

They have to plan their costs in such a way that margins they can (hold on to) so that they can reduce the impact," he said. Even in 2008 after the global financial crisis, Indian IT companies had some growth because at that time, recovery happened very fast. "This time nobody knows because unless you find medicine for this, this is going to keep coming back; look at Singapore, initially they managed and now they are saying full lockdown.

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Even US is similar; nobody knows how long this is going to prolong; economies are like titanic ship, everything is frozen now, for you to restart and start the engine kicking is going to take a long time. This year is going to be very tough for IT industry," Balakrishnan added.

Whistleblower case: SEC concludes probe; no action expected, says Infosys

Infosys on Tuesday said the US Securities and Exchange Commission (SEC) has concluded the investigation in the whistleblower allegations made last year, and that it does not anticipate any further action by the regulator.

In October last year, Infosys had informed stock exchanges of having received anonymous whistleblower complaints alleging certain unethical practices by the top management. It then started a probe into the matter and roped in external investigators.

The whistleblowers had accused CEO Salil Parekh of unethicla prcatices and unaccounted travels. The whistleblower, who claimed to be part of Infosys' finance team, has also alleged that Parekh was not able to control cost and was leading the company towards a low margin regime. In the three-page letter, the whistleblower has also launched vicious personal attacks against Parekh.

US market regulator SEC had also initiated a probe into the matter.

In a regulatory filing on Tuesday, Infosys said it has received a notification from the SEC stating that its investigation investigation has concluded. The company does not anticipate any further action by the SEC on this matter."

The Bengaluru-based company said it has responded to all the inquiries received from Indian regulatory authorities and that it will continue to cooperate with the authorities if there are any additional requests for information.

In January this year, Infosys had said its audit committee had found no evidence of financial impropriety or executive misconduct, virtually giving a clean chit to CEO Salil Parekh and CFO Nilanjan Roy who were accused by anonymous whistleblowers of rigging the company's balance sheet.

Infosys evacuates Bengaluru building amid COVID-19 scare among employees

The Infosys in Bengaluru has evacuated one of its satellite office buildings following reports of its employee coming in contact with a suspected coronavirus patient.

The development comes after the Karnataka government advised IT and other professionals working in air-conditioned places to work from home for time being, for about a week, to prevent the spread of the virus.

An internal communication from the office here read, "We have received information about a situation of a team member from the IIPM building, who may have been in proximity to an individual with suspected COVID-19."

The IIPM building was evacauted on Friday as a precautionary measure, a company official told PTI on Saturday adding that the place was being sanitised.

The Infosys management has requested its employees to stay calm as it was only to ensure that they were "cautious and better prepared."

Three of the six confirmed coronavirus patients in Karnataka are working in the IT sector.

Infy, TechM get Delhi HC notices over flaws in GSTN online portal system

The Delhi High Court has issued notices to Infosys and Tech Mahindra on a petition regarding technical flaws in the online portal system evolved by the Goods and Services Tax Network (GSTN).

The two firms are IT support contractors for the portal. The court said their presence was needed “to better appreciate the intricacies, and to ensure the grievances raised by the taxpayers and our orders are understood and implemented in true perspective”. Harpreet Singh, partner at consultancy KPMG, said the petitioner had raised the issues of non-availability of annual forms under the GST system for 2018-19, among others.

Infosys signs multi-million contract with ABN AMRO to accelerate operations

Infosys announced on Thursday that it has signed a multi-year, multi-million contract with ABN AMRO Bank to accelerate its cloud and DevOps (development and operations) transformation journey.

As part of this renewed contract, the Bengaluru- headquartered IT major will enable ABN AMRO Bank to achieve its business and operational goals by aligning its IT transformation with its cloud platform strategy, an Infosys statement said.

"Leveraging its expertise in cloud and data management services, Infosys will help ABN AMRO Bank to navigate to a single public cloud to deliver agility and cost efficiency in business operations," it said.

Infosys Q3 profit up 23% at Rs 4,457 cr, revenue jumps 7.9% to Rs 23,092 cr

Infosys, the country’s second-largest IT services company, on Friday met street estimates of the third quarter’s financial numbers and gave guidance for double-digit growth for the full year.

For the quarter ended December, Infosys posted a net profit of Rs 4,457 crore, a rise of 23.5 per cent year-on-year (YoY). In sequential terms, net profit grew around 11 per cent.

Revenues grew 7.9 per cent YoY at Rs 23,092 crore during October-December. Sequentially, it grew 2 per cent. In dollar terms, revenues were at $3.24 billion, 8.6 per cent higher YoY and 1 per cent on a sequential basis. Infosys’ revenues in constant-currency terms rose 9.5 per cent and 1 per cent in sequential terms.

The third quarter is traditionally a weak quarter for Indian IT services players owing to a higher number of holidays and client furloughs towards the end of the calendar year.

The New York Stock Exchange-listed company is expecting its revenue to grow 10-10.5 per cent in FY20 as against 9-10 per cent guided earlier, on the back of a robust pipeline of large deals and uptick in client spending in sectors such as retail. Improvement in the operating margin, a healthy deal pipeline, and a dip in overall attrition levels were the other positives for Infosys during this quarter.

“We had a robust quarter despite higher than usual furloughs. Our revenues have grown in double digits year-to-date with a strong deal pipeline,” said Salil Parekh, chief executive officer and managing director.

“Given the digital momentum, we have increased our guidance for the whole fiscal year.”

Infosys’ digital revenues grew 41 per cent to constitute 40.6 per cent of the total. However, the company’s core revenues contracted 5 per cent YoY during this period. In the third quarter, the size of large deals stood at $1.8 billion, taking the earnings on this count for the first nine months to more than $7 billion. The IT services firm signed 14 large deals, of which seven were in the banking and financial services space.

During the third quarter, Infosys' operating margin improved 20 basis points to 21.9 per cent on the back of cross currency gains apart from cost optimisation measures. "We are on track to meet our margin guidance of 21-23 per cent for the fiscal. All our cost opimisation measures are executed and we are also building up an employee pyramid in client locations. These measures will help us to improve our margin further," said Nilanjan Roy, chief financial officer at Infosys.

Among verticals, Infosys reported double digit growth in verticals like communication, hitech and manufacturing among others. However, growth in the key vertical of banking, financial services & insurance (BFSI) vertical remained subdued at 6.2 per cent, while it was 2.5 per cent in the retail vertical YoY basis. While communications grew at 18.6 per cent, hitech witnessed a growth of 12.1 per cent.

"There was weakness in the BFSI and retail verticals during the quarter. However, as the client spend comes back, we are better-placed to cash in those opportunities," said UB Praveen Rao, COO at Infosys.

Net staff addition in the third quarter stood at 6,968 to take its total headcount to 243,454. Infosys' attrition also came down by 210 basis points on sequential basis to 19.7 per cent in the December quarter. "For the IT services segment, voluntary attrition was at 15.6 per cent, which was around two per cent lower than the previous quarter," said Rao of Infosys. "In second quarter, we hired around 12,000 people," he added.

Market analysts said Infosys' performance was in line with their expectations. "Infosys delivered in-line revenue performance, while margins slightly missed our expectations. Net profit beat our estimates on the back of higher other income and lower tax rate. BFSI revenue growth moderated during the quarter, on the expected lines," Sanjeev Hota, Head of Research at Sharekhan. "Audit committee has given clean chit to both CEO and CFO on whistleblower issue and also finds no proof of financial impropriety and misconduct, which is a positive for the stock."

Whistleblower case: Infosys audit panel found no 'financial impropriety'

Information technology services major Infosys on Friday said its audit committee found “no evidence of financial impropriety or executive misconduct” at the firm as alleged by whistle-blower letters last year. The investigation was carried out with the help of external agencies.

The Bengaluru-headquartered firm, in a seven-page release, rejected each of the allegations made in the anonymous whistle-blower complaints disclosed on October 21. This came on a day when the company announced its financial earnings for the third quarter of 2019-20.

The company said the audit committee, headed by Independent Director D Sundaram and assisted by independent legal counsel Shardul Amarchand Mangaldas & Co and PricewaterhouseCoopers, found that the “allegations are substantially without merit”.

Based on the findings, the committee said the restatement of previously announced financial statements or other published financial information was not required.

ALSO READ: Infosys Q3 profit up 23% at Rs 4,457 cr, revenue jumps 7.9% to Rs 23,092 cr

“The committee took the complaints seriously and commissioned a thorough investigation. It determined that there was no evidence of financial impropriety or executive misconduct,” said Sundaram.

chartInfosys co-founder and chairman Nandan Nilekani, who was present at the earnings press conference, vouched for the firm’s corporate governance standards and ethics, which he said continues to remain undiluted. “I am pleased that after a rigorous investigation, the committee has found no wrongdoing by the company or its executives. CEO Salil Parekh and CFO Nilanjan Roy are strong custodians of the company’s proud heritage,” he said.

The investigation conducted by Infosys, however, is independent of two other investigations being conducted by the US market regulator SEC, and Indian regulator Securities and Exchange Board of India (Sebi), based on the same whistleblower complaints.

Additionally, the NYSE-listed company is also facing a shareholders’ class action lawsuit that was filed in the district court of New York, in October. The company said, it would contest the lawsuit.

“The Group is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The company’s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the company’s results of operations or financial condition,” a statutory filing by Infosys disclosed to the exchanges, said.

chartIn a letter dated September 20, 2019, an anonymous group calling itself as “Ethical Employees”, had alleged that Infosys’ current management was taking “unethical” steps to inflate short-term revenue and profit.

In the letter, the whistleblower flagged concerns about several zero-margins deals, saying they were closed by flouting norms. The whistleblower also made several personal charges against Parekh, and Roy.

During the probe, Infosys said, the investigation team conducted an extensive analysis, 128 interviews with 77 persons, including relevant company officials mentioned in the allegations. The process also involved identifying 46 custodians for collection of relevant documents and electronic data apart from reviewing over over eight terabytes of electronic data involving 210,000 documents from electronic sources and imaged devices.

Additionally, the company consulted independent internal auditors Ernst & Young on large deals and treasury-related processes, the findings of which were shared with the probe team.

“While our business is focused on delivering solutions for a changing world, for 38 years our culture and values have remained constant,” said Nilekani. “Infosys is a model of strong corporate governance, and the company’s handling of these allegations from start to finish has been consistent with these high standards of governance.”

Whistleblower case: Don't take anything at face value, says Nandan Nilekani

When co-founder and chairman Nandan Nilekani attended the Infosys earnings conference on Friday, it was evident that the company was going to announce more than numbers. As the companies disclosed the investigation report into the whistleblower complaints, Nilekani decided to be personally present to answer a volley of questions. Excerpts of what he said:

On the whistleblower allegations:

We received the complaint on September 30 and then, we followed a series of actions. What we have done is the absolute right thing to do. We followed the highest standard of corporate governance and disclosures. If the whistleblower goes to the media, then that is not in our control.

Frequency of whistleblower complaints:

This is the season 3 of this Netflix series (laughs). Obviously, I can’t say if there will be another season of this. I am not the producer of these episodes. Certainly, it is a distraction. Our finance department, which has nine days to close the books, has to deal with this (probe) at the same time.

Possible involvement of disgruntled employees:

If this has been done by disgruntled employees or not, needs to be examined. It could have been done by anybody. It could have been done by employees or possibly by outsiders. I wouldn’t get into conclusion on that. If somebody says ethical employees, then you should think about it. Your (journalist’s) job is not to take anything at face value.

ALSO READ: Whistleblower case: Infosys audit panel found no 'financial impropriety'

On whistleblowers claiming to be in possession of purported emails and audio files:

As we have said earlier, we don’t have any. If there are any voice mails or emails, they are welcome to give it to us or to the investigators. So, if we don’t receive that, what conclusion we come to. As far as SEC is concerned, they neither confirm nor deny anything (about having access to voice mails, emails). That's why, we are suggesting that they should give it our investigators.

Ongoing investigations by SEC, other regulators:

First of all, we work with a large number of regulators and exchanges. We are fully cooperating in the investigations. Therefore, I will not draw any conjecture. But, we are very comfortable as this has been a thorough investigation.

On his continuance on chairman's role:

As I have always said, I will be here as long as needed. That doesn't change.

Any plan to change whistleblower policy:

We are committed to disclosure levels which have the highest levels of transparency and we will continue to do that. As far as the policy is concerned, we will have a look at it.

In the US, whistleblower has been given a lot of protection and rightly so. However, this policy can be potentially weaponized. Now, this is not an uncommon thing in India that RTI (Right to Information Act) is mostly used by people to find out why the other guy gets promotion. Also, public interest litigations (PILs) are used as ‘private interest litigations’ or ‘publicity interest litigations’.

On continuance of deputy CFO, Jayesh Sanghrajka

Our finance team comprises of good people. As far as I am concerned, Jayesh was here and Jayesh is here.

Infosys on Friday said the board's audit committee has completed the independent probe into the…

Infosys on Friday said the board's audit committee has completed the independent probe into the anonymous whistleblower allegations and found "no evidence" of financial impropriety or executive misconduct.

"The audit committee took the anonymous whistleblower complaints very seriously and commissioned a thorough investigation with the assistance of independent legal counsel. The audit committee determined that there was no evidence of any financial impropriety or executive misconduct," Infosys Audit Committee Chairperson D Sundaram said in a statement.

The committee has concluded the independent investigation into allegations contained in the anonymous whistleblower complaints the company disclosed on October 21, 2019 and determined that the allegations are substantially without merit, the statement said.

The audit committee conducted a thorough investigation with the assistance of independent legal counsel Shardul

Amarchand Mangaldas & Co and PricewaterhouseCoopers, it added.

The Bengaluru-based company, after its October quarter results, had informed the stock exchanges of anonymous whistleblower complaints that had alleged certain unethical practices by the top management.

Speaking about the findings, Infosys Chairman Nandan Nilekani said CEO Salil Parekh and CFO Nilanjan Roy are strong custodians of the company's proud heritage.

"Salil has played a key role in reinvigorating the organisation and driving momentum and the board is confident that he will continue to execute on the company's new strategic direction successfully," he added.

Visa case: Infosys settles lawsuit in US with payout of $800,000

Infosys has settled a case relating to allegations of non-payment of payroll taxes for some employees by agreeing to pay $800,000 (Rs 5.6 crore) to the American state of California.

“The agreement concludes the California attorney general’s (AG’s) investigation into allegations related to the payment of state payroll taxes for some employees travelling on B-1 visas, dating back to 2006,” the Bengaluru-headquartered information technology (IT) major stated. “The agreement was reached to avoid the time, expense, and distraction of protracted litigation.”

In legal parlance, a settlement involves no formal admission of guilt. Around 500 of its employees were working in California during 2006 on B-1 visas. It was alleged by an ex-staffer there, Jack Palmer, that the classification of employees under B-1 visas, instead of on H-1B, was done to avoid payroll taxes under the state’s labour laws, including unemployment and disability insurance, and employment training.

“The settlement resolves the AG's claims that Infosys’ conduct violated California laws,” state AG Xavier Becerra confirmed.

Infosys had constantly denied the allegations. In 2017, it had also settled another investigation into alleged visa rule violations by agreeing to pay $1 million to New York state.

With tightening visa regulations and rising protectionist measures under the current US government, all Indian IT services companies are facing allegations on breach of labour laws. In November last year, Tata Consultancy Services won a class-action lawsuit which had alleged discrimination against non-South Asian workers in America. HCL Technologies and Cognizant had been sued by two workers from Walt Disney World workers in Orlando, Florida, in 2016 on charges of being replaced with less costly Indian employees using H-1B visas.

"Just like the pharma industry getting observations from (the US sector regulator), the Indian IT industry is facing visa-related lawsuits. These are not debilitating to the business (in that sense) and are issues coming up in the normal course of business," said Shriram Subramanian, founder of corporate governance advisory entity InGovern.

What's the case

Infosys staffers were working on B-1 visas, instead of H-1B, to evade payroll taxes, it was alleged

Though the alleged event was related to 2006, a case was filed by former Infosys employee Jack "Jay" Palmer in 2017

Settlement was done to avoid time, expense and distraction of protracted litigation, according to Infosys

Infosys fined $800,000 for worker misclassification, tax fraud in US

Infosys, India's top IT major, has agreed to pay $800,000 to settle allegations of misclassification of foreign workers and tax fraud, officials announced Tuesday.

Infosys will pay California $800,000 (nearly Rs 56 crore) to resolve allegations that between 2006 and 2017, approximately 500 Infosys employees were working in the State on Infosys-sponsored B-1 visas rather than H-1B visas, California Attorney General Xavier Becerra said.

This misclassification resulted in Infosys avoiding California payroll taxes such as the unemployment insurance, disability insurance, and employment training taxes.

H-1B visas also require employers to pay workers at the local prevailing wage, an official statement said.

"Today's settlement shows that attempting to evade California law doesn't pay. Infosys brought in workers on the wrong visas in order to underpay them and avoid paying taxes. With this settlement, California has been made whole," Becca said.

In the settlement, Infosys, however, denied the allegations and asserted of no wrongdoings.

In 2017, Infosys had agreed to pay the State of New York $1 million to settle allegations of submitting wrong documents to federal authorities.

The Californian settlement that was carried out in November was released to the media on Tuesday.

California initiated legal actions against Infosys after a compliant was filed by whistleblower Jack "Jay" Palmer, a former Infosys employee.

Palmer had sued the Indian company in 2017.

Infosys launches Microsoft Azure-powered security solution Cyber Next

Global software major Infosys on Tuesday launched Cyber Next, a Microsoft Azure Sentinel-powered platform offering enhanced enterprise security management services solutions.

"We are developing next-generation platform-based offerings that leverage Azure Sentinel to help customers simplify their security operations, and scale as they grow," Infosys cybersecurity practice head Vishal Salvi said in a statement.

Salvi said Microsoft Azure Sentinel's core features match with the Bengaluru-based $11 billion company's philosophy of diagnose, design, deliver and defend users from security threats.

Microsoft Azure Sentinel is a threat averting solution for enterprises, combining the American software giant's decades long security experience with artificial intelligence and cloud.

With features such as Security Information and Event Management (SIEM) and Security Orchestration Automation and Response (SOAR), the Microsoft solution enables enterprises to address data threats formidably.

"We have a responsibility to bring new cybersecurity capabilities to our customers. By combining the strengths of the Microsoft security portfolio with Infosys service offerings, enterprises are able to better manage their security posture," said Microsoft cybersecurity solutions group corporate vice president Ann Johnson.

Cyber Next's services include round the clock monitoring and lifecycle management, among others through an internationally scattered network of cyber defence centres, experts and skilled security analysts.

Infosys whistleblower case: New letter blaming CEO Salil Parekh surfaces

Days after a whistle-blower letter accused Infosys CEO Salil Parekh of “unethical practices”, another complaint has surfaced against him, alleging he mostly remains absent from the headquarters in Bengaluru and prefers to stay in Mumbai to look after his personal investments in small companies.

The new letter is addressed to independent directors on the company’s board and the chairman of the Nomination and Remuneration Committee (NRC). The whistle-blower, who claimed to be part of Infosys' finance team, also alleged that Parekh was not able to control cost and leading the company towards a low margin regime.

In the three-page letter, which has been seen by Business Standard, the whistle-blower has launched personal attacks on Parekh and used expressions like “slimy individual” and “smart cookie” for him. However, the authenticity of the letter could not be verified and the company has refused to comment.

In the first letter, a whistle-blower had alleged wrongdoings in accounting practices, which Infosys vehemently denied.

Six professors awarded Infosys Prize 2019 for science and research

Six eminent professors have won the Infosys Prize 2019 across different categories of science and research, the software major's science foundation announced on Friday.

The annual award includes a pure gold medal, a citation and a prize purse worth $100,000 or its equivalent in the Indian rupees, the Infosys Science Foundation (ISF) said in a statement.

The winners of the Infosys Prize 2019 were announced across six categories -- Engineering and Computer Sciences, Humanities, Life Sciences, Mathematical Sciences, Physical Sciences, and Social Sciences.

A panel of accomplished jurors comprising renowned scholars and professors shortlisted the winners from 196 nominations.

"The Infosys Prize continues to recognise exemplary work in scientific research and enquiry," S. D. Shibulal, President of the ISF said in a a statement.

"Many Infosys Prize laureates have gone on to contribute significantly in key areas like healthcare, genetics, climate science, astronomy and poverty alleviation, amongst other things. Their work has immediate implications for the human race and the planet, he said.

N. R. Narayana Murthy, Founder of Infosys and Trustee - ISF said, "We should start helping our youngsters pursue fundamental research enthusiastically.

"They should be encouraged and equipped to become contributors to solving huge problems that confront us every day. I want India to be a place where discovery and invention happen every month," Murthy said in a statement.

The Infosys Prize 2019 for Engineering and Computer Science is awarded to Professor Sunita Sarawagi from the Indian Institute of Technology (IIT), Bombay for her research in databases, data mining, machine learning and natural language processing, and for important applications of these research techniques, ISF said.

The foundation said Sarawagi's work has practical applications in helping clean up unstructured data like addresses on the web and in repositories which then helps in more efficient handling of queries.

In the field of Humanities, the prize has been given to Manu V. Devadevan, Assistant Professor at Indian Institute of Technology (IIT), Mandi for his original and wide-ranging work on pre-modern South India.

He critically reinterprets much of the conventional wisdom about the cultural, religious and social history of the Deccan and South India, ISF said.

Manjula Reddy, Chief Scientist, Centre for Cellular and Molecular Biology (CCMB), Hyderabad bagged the prize in the field of Life Sciences for her "groundbreaking" discoveries concerning the structure of cell walls in bacteria.

Reddy and her colleagues have revealed critical steps of cell wall growth that are fundamental for understanding bacterial biology. This work could potentially help in creating a new class of antibiotics to combat antibiotic resistant microbes, according to ISF.

For Mathematical Sciences, the prize is awarded to Siddhartha Mishra, Professor at ETH Zurich in Switzerland, for his outstanding contributions to Applied Mathematics, particularly for designing numerical tools for solving problems in the real world.

Mishra's work has been used in climate models, in astrophysics, aerodynamics, and plasma physics. He has produced codes for complicated realistic problems such as tsunamis generated by rock slides, and waves in the solar atmosphere, according to ISF.

For Physical Sciences, the prize this year is awarded to G Mugesh, Professor at the Indian Institute of Science (IISc), Bengaluru for his seminal work in the chemical synthesis of small molecules and nanomaterials for biomedical applications.

ISF said his work has contributed to the understanding of the role of trace elements, selenium and iodine, in thyroid hormone activation and metabolism, and this research has led to major medical advances.

Anand Pandian, Professor at Johns Hopkins University in the US, won the prize this year in the for Social Sciences category for his imaginative work on ethics, selfhood and the creative process, ISF said.

Pandian's research encompasses several themes such as cinema, public culture, ecology, nature and the theory and methods of anthropology, it said.

NFRA, RoC seek information on whistleblower complaints, says Infosys

The National Financial Reporting Authority (NFRA) and the Registrar of Companies, Karnataka, has sought information from Infosys on the whistleblower complaints that alleged unethical practices by the company's top management, the IT major said on Wednesday.

Additionally, the Bengaluru-based company has also been asked by the National Stock Exchange (NSE) and the BSE for "further information" related to the anonymous whistleblower complaints.

"The company has received letters from the secretary, National Financial Reporting Authority and the Registrar of Companies (RoC), Karnataka, seeking certain information in connection with the above. The company has also received letters from National Stock Exchange of India Ltd and BSE Ltd seeking further information in relation to the anonymous whistleblower complaints," Infosys said in a regulatory filing.

Infosys added that it will provide the information as per the requests.

Earlier on Wednesday, Infosys said speculations of co-founders and former employees being involved in the recent whistleblower allegations were "appalling" and seem to be aimed at tarnishing the image of some of "the most accomplished and respected individuals".

Infosys condemned the "mischievous insinuations made by anonymous sources against the co-founders and former colleagues, suggesting their involvement in the recent whistleblower allegations".

"These speculations are appalling and seem to be aimed at tarnishing the image of some of the most accomplished and respected individuals. I have deep regard for the life-long contribution of all our co-founders," Infosys Chairman Nandan Nilekani said in a statement.

He added that the co-founders have served the company "selflessly" and remain committed to the long-term success of Infosys.

He pointed out that an external law firm is already conducting an independent investigation into the allegations, and said the outcome of the investigation will be shared with all stakeholders at the relevant time.

Earlier this week, Infosys had said it is yet to receive any evidence to corroborate anonymous whistleblowers' complaints.

In October, Infosys had informed the stock exchanges of having received anonymous whistleblowers' complaints alleging certain unethical practices by the top management.

Infosys Chairman Nandan Nilekani had said the whistleblower complaint dated September 20, as well as an undated complaint had been received by one of the board members on September 30.

In the letter, dated September 20, and signed by 'Ethical Employees', it was alleged that CEO Salil Parikh as well as Chief Financial Officer (CFO) Nilanjan Roy engaged in forced revenue recognition from large contracts not adhering to accounting standards.

The complaints were placed before the audit committee on October 10, and to the company's non-executive board members on October 11, also the day when Infosys announced its second quarter results.

US market regulator SEC has also initiated a probe on the matter, while Rosen Law Firm had said it was preparing a class-action suit to recover losses suffered by Infosys investors in the US.

Back home, the Securities and Exchange Board of India (Sebi) had sought additional information from the company, while the National Financial Reporting Authority (NFRA) - part of the corporate affairs ministry - is looking into alleged accounting lapses at the firm.

In 2017, Infosys had witnessed a protracted stand-off between its high-profile founders and the previous management over allegations of corporate governance lapses and issues related to severance package doled out to former executives, including ex-CFO Rajiv Bansal.

Following the tussle, then CEO Vishal Sikka quit followed by some board members. Infosys co-founder Nandan Nilekani was then brought in as chairman to steer the company. Parekh joined the company in January last year as the CEO.

Infosys has also settled with Sebi the case of alleged disclosure lapses regarding a payment made to Bansal.

Infosys surges nearly 5% today; should you buy the stock?

Leading information technology (IT) players such as Infosys, HCL Tech, and Tata Consultancy Services (TCS) were trading in the positive territory on Thursday. Infosys (up over 4.50 per cent) was the top performer on the S&P BSE Sensex, while TCS was trading close to its all-time high of Rs 2,296 on the BSE. HCL Tech, too, was trading nearly a per cent higher. Tech Mahindra, however, was trading over a per cent lower at Rs 747.40 apiece on the BSE.

Shares of Infosys were trading higher for the fifth straight day, up 9 per cent in past one week, as compared to a three per cent rise in the benchmark index. Prior to that, share price of Infosys slipped 17 per cent in just three trading days from Rs 768 to Rs 635 after an anonymous whistleblower group called 'Ethical Employees' alleged that the company’s current management was taking 'unethical' steps to spur short-term revenue and profits.

According to the whistleblower's complaint to US Securities and Exchange Commission and the board of Infosys, the Bengaluru-based firm's current CEO Salil Parekh was not taking necessary approvals before entering into large deals. "Several billion-dollar deals of last few quarters have nil margin," the letter said. "In large contracts like Verizon, Intel, joint ventures (JVs) in Japan, ABN AMRO acquisition, revenue recognition matters are forced," the letter added.

Post the development, the company issued a statement saying the board was committed to uphold highest standard of corporate governance and protect the interests of all stakeholders.

SHOULD YOU BUY THE STOCK

Analysts at Edelweiss Securities remain positive on the stock saying they have full faith on the company's fundamentals and that it is well on course to outclass the industry. "Infosys has corrected by 14 per cent over the past 12 days in the wake of a whistle-blower complaint, alleging misdemeanors by management. The knee-jerk correction in the stock price implies it now trades at a mouth watering 16.5x FY20E EPS, thereby widening its discount to TCS (which has a similar growth profile) to 35 per cent from 19 per cent," they wrote.

The brokerage has increased Infosys’s weightage in its model portfolio from 15 per cent earlier to 27 per cent. It has maintained ‘BUY’ rating on the stock with the target price of Rs 955, implying 20x Q4FY21E EPS.

Ambareesh Baliga, independent market analyst, too feels the correction in the stock provides a good opportunity for the investors to buy the stock.

"The allegations are trivial compared to what is followed by most of the listed entities – booking personal expenses, booking future income, postponing expenses etc to boost profits is done by most of the list entities. It becomes a big news as the entity involved is supposedly the epitome of Corporate Governance," Baliga said.

In case, the allegations are proven, the CEO and CFO would have to go, taking us back to the situation when Vishal Sikka had to go. However, in such a situation, the new CEO/CFO would be clear on what Corporate Governance means in Infosys. And if the allegations are proven to be false, we could see an immediate bounce. Either ways it could be good entry point, the analyst added.

As regards the IT sector, Edelweiss Securities remains bullish. "Record deal-wins, an encouraging deal pipeline and sanguine management commentaries on demand strengthen our conviction in the Indian IT’s solid earnings trajectory," the brokerage said in a note dated October 30.

Infosys turmoil: Employees worry its focus on values is fading

As the Infosys turmoil started by a whistle-blower complaint refuses to die anytime soon, employees are mostly worried about what impact this could have on their incentive structures or promotions, in addition to a general wariness about how the company’s focus on values is fading.

“I have been here for over a decade, and the difference began being visible right after (ex-CEO) Vishal Sikka came in. The founders’ focus on values was something that made Infosys a coveted place to work at. Now it is just like any other IT company,” said a Pune-based employee who did not wish to be named.

Another employee, based in Bengaluru, said the only thing people were worried about were whether this will impact jobs in any way. “Our fear is that this shouldn’t turn out to be another Satyam. That will certainly impact jobs in an steady slow market. The constant scrutiny on the company is not a pleasant thing, plus there is little clarity about what is going on,” this person said.

Last week, Infosys grabbed headlines after an anonymous whistleblower group called 'Ethical Employees' alleged that the company’s current management and CEO Salil Parekh was taking 'unethical' steps to spur short-term revenue and profits.

In 2016-17, under the first non co-founder CEO Vishal Sikka, whistleblowers has made allegations against the firm’s corporate governance practices, leading to a very public war of words between co-founder NR Narayana Murthy and Sikka.

While some see the new and old whistleblower complaints as the inability of the old guard to hand over the baton to non co-founder CEOs, others say the back to back corporate governance issues being played out in public have diluted the internal focus on values, and impacted employee morale.

“You know, what matters most to an employee is their growth within the company. Here, we have not had promotions in a long time, there are hardly any raises, and when a big issue like this takes place, our managers often use it as an excuse to stop promotions and raises,” said a Chandigarh-based employee of Infosys who has been with the firm for over 15 years.

Most however, said they wouldn’t speculate on the nature of the allegations.

“You cannot just believe the CEO made such irregularities. Nothing has been proven yet. We should just wait and watch,” said another Bengaluru-based employee.

Some believe the complaint only pertains to the US market and employees since the whistleblower group first sent it to the US Securities and Exchange Commission and the US Labour Department.

The last time around, Sikka and Murthy’s battle ended in Sikka having to quit, in spite of his credentials. He was earlier the chief technology officer at technology giant SAP.

Parekh also came with an impeccable track record- he was one of the five global deputy CEOs at Capgemini, and was a contender for the global CEO spot at the French IT services company. While that did not happen, he became the India CEO and then the executive chairman at the company before joining Infosys.

Sebi initiates probe against Infosys over whistleblower charges

The Securities and Exchange Board of India (Sebi) has initiated a preliminary enquiry against information technology services major Infosys following allegations of unethical practices by a whistleblower.

The market regulator has received the whistleblower’s letter along with voice recordings and emails supporting his claims. “The allegations are serious in nature. A proper enquiry into the matter is needed. We have taken up the matter for a preliminary enquiry,” said a source in Sebi.

The anonymous letter written by an employee group has accused Infosys Chief Executive Officer (CEO) Salil Parekh and Chief Financial Officer (CFO) Nilanjan Roy of indulging in unethical practices. The letter calls for an “immediate investigation” and has accused the top management of changing investment and accounting policies to boost short-term profits.

It also accuses the management of bypassing the board and auditors to escape scrutiny. Infosys’ audit committee has also started consultations with its independent internal auditor, EY, besides appointing law firm Shardul Amarchand Mangaldas for a separate probe into the case. Sebi sources said they would soon direct Infosys to share the probe report. “Our next course of action could depend on the findings of the probe at the company,” said a regulatory official.

The matter could get further complicated for Infosys as the company is also listed on the Nasdaq Stock Exchange in the US. The whistle-blower letter has also been sent to the US Securities and Exchange Commission (SEC).

It is likely that Sebi and the SEC could make use of the International Organization of Securities Commissions’ multilateral memorandum of understanding (MMoU) on cooperation and information sharing. Both Sebi and the SEC are the signatories of the MMoU. “If required, we will seek assistance from the SEC and coordinate with it over the Infosys probe under our MMoU,” said the source.

Shares of Infosys had crashed 16 per cent on Tuesday, eroding over Rs 53,000 crore in market capitalisation. The stock ended with gains of a little over 1 per cent on Wednesday.

The BSE on Wednesday wrote to Infosys, seeking explanation on why the company failed to make disclosures with respect to the whistle-blower complaint.

The stock exchanges were also studying the trading pattern in Infosys over the past one month. “If there are any red flags generated in surveillance, the same will be shared with Sebi. We have to make sure that no individual has made unlawful gains by being in possession of price-sensitive information,” said the source.

This is not the first time Infosys has had tryst with Sebi. Earlier this year, the Bengaluru-based company settled a case pertaining to the severance package paid to former CFO Rajiv Bansal. The company had to pay Rs 34 lakh as settlement fees as the Sebi probe had found that the compensation paid was not in accordance with the company’s remuneration policy.

Infosys audit committee to probe whistleblower allegations: Nilekani

Infosys Chairman Nandan Nilekani on Tuesday said the company's audit committee will conduct an independent investigation on whistleblower allegations of CEO Salil Parekh and CFO Nilanjan Roy indulging in "unethical practices" to boost short-term revenue and profits.

The committee began consultation with independent internal auditors EY, and has retained law firm, Shardul Amarchand Mangaldas & Co. to conduct an independent investigation, Nilekani noted in his statement to the stock exchanges.

Nilekani said one board member had received two anonymous complaints on September 30, 2019 - one dated September 20, 2019, titled Disturbing unethical practices and an undated note with the title, Whistleblower Complaint.

He said both had been placed before the audit committee on October 10, 2019, and before the non-executive members of the board the following day.

"Post the board meeting of October 11, 2019, the audit committee began consultation with the independent internal auditors (Ernst & Young) on terms of reference for their prima facie investigation. The audit committee has now retained the law firm of Shardul Amarchand Mangaldas & Co. (October 21, 2019), to conduct an independent investigation," Nilekani noted in his statement.

The board, in consultation with the audit committee, will take such steps as may be appropriate based on the outcome of the investigation, he added.

The whistleblower complaint by a group that calls itself "ethical employees" had alleged CEO Salil Parekh and CFO Nilanjan Roy were indulging in "unethical practices" to boost short-term revenue and profits.

"We have high respect for all of you and bring to your notice the unethical practices of CEO in recent quarters. Same measures are taken up in the current quarter also to boost short term revenue and profits," the letter addressed to the board of directors dated September 20, read.

The whistleblowers said they have emails and voice recordings on these matters.

Infosys on Monday had said the whistleblower complaint has been placed before the audit committee as per the company's practice, and that it will be dealt with in accordance with the company's whistleblowers policy.

Nilekani, in his statement on Tuesday, said the company was made aware of another letter (dated October 3) that was purportedly written to the Office of Whistleblower protection program, Washington DC. This letter referred to the September 20, 2019, complaint, and to emails and voice recordings in support of the allegations.

"These complaints are being dealt with in an objective manner. The undated whistleblower complaint largely deals with allegations relating to the CEO's international travel to the US and Mumbai," Nilekani pointed out.

"Although we have not been provided any of the emails or voice recordings, we will ensure that the generalised allegations are investigated to the fullest extent. Additionally, to ensure independence in these investigations, the CEO and CFO have been recused from this matter," Nilekani added.

He also noted that Infosys' statutory auditors, Deloitte, India, have been "completely updated" on this matter post the October 11 Board meeting.

In 2017, Infosys had witnessed a protracted stand-off between its high profile founders and the previous management over allegations of governance lapses and issues relating to severance package doled out to former executives, including ex-CFO Rajiv Bansal.

Following the tussle, the then CEO Vishal Sikka quit followed by some board members. Infosys co-founder Nandan Nilekani was then brought in as Chairman to steer the company. Salil Parekh joined the company in January last year as the CEO.

Infosys has also settled with Sebi the case of alleged disclosure lapses regarding payment made to Bansal earlier this year. It paid Rs 34.34 lakh to the markets regulator to settle the case.

On the BSE, shares of the company plunged up to 14 per cent to trade around Rs 663 in early trade on Tuesday.

Anonymous whistleblowers accuse Infosys CEO, CFO of unethical practices

A few anonymous employees of global software vendor Infosys have accused its Chief Executive Officer (CEO) Salil Parekh and Chief Financial Officer (CFO) Nilanjan Roy of unethical practices for many quarters.

"Parekh and Roy have been resorting to unethical practices for many quarters, as evident from their e-mails and voice recordings of their conversations," said the complainants, who called themselves 'ethical employees' in a 2-page letter to the city-based IT behemoth's board of directors on September 20, a copy of which has been accessed by IANS.

When there was no response from the board to their letter, an unnamed whistleblower on behalf of the unethical employees on October 3 wrote to the US-based office of the Whistleblower Protection Programme, alleging willful mis-statement material accounting irregularities for (the) last two quarters (April-September).

In response, the company in a statement on Monday said the whistleblower complaint had been placed before the audit committee as per the company's practices.

"The complaint will be dealt with in accordance with the company's whistleblowers policy," the IT major said in a statement to IANS.

"In (the) last quarter (July-September), we were asked not to fully recognise costs like visa costs to improve profits. We have voice recordings of these conversations," claimed the letter.

The employees also alleged that in the quarter under review of fiscal 2019-20, the management put immense pressure on them to not recognise reversals of $50 million of upfront payment in FDR contract, as it will slash profits for the quarter and negatively affect the company's stock price. The letter said not recognising reversals of upfront payment in FDR contract was against fair accounting practice.

"Critical information is hidden from the auditors and board. In large contracts like Verizon, Intel and JVs (Joint Ventures) in Japan, ABN Amro acquisition, revenue recognition matters are forced which is not as per the accounting standards," said the letter.

The employees said they have been instructed not to share large deal information with auditors.

The plaintiffs are confident of sharing the alleged emails and voice recordings with investigators when demanded.

"The CEO is bypassing reviews and approvals and instructing sales (teams) not to send mails for approvals. He directs them to make wrong assumptions to show margins," recalled the unnamed Infoscions.

Alleging that the CFO (Roy) was hand in glove with the CEO (Parekh), the insiders said the former complied with unethical practices, restraining ethical employees from showing large deal issues to the board during presentations.

"The CEO told us, no one in the board understands these things, they are happy as long as the share price is up. Those two Madrasis (Sundaram and Prahlad) and Diva (Kiran Mazumdar-Shaw) make silly points, you just nod and ignore them," charged the statement.

Biocon chairperson Shaw is an independent director on the Infosys board.