An expert deception-detection analysis of the responses of Infosys executives to questions in its recent quarterly earnings call relating to changes in U.S. visa policies suggests that the executives are far more concerned about the ramifications on the company of visa-related issues than they have chosen to appear to date.
I have made reference in a couple of my posts to the fact that I am a partner in QVerity, a company that provides training and consulting services in the fields of deception detection, interviewing techniques and employee screening. Phil Houston, a founding partner of QVerity and the company's CEO, is a 25-year veteran of the Central Intelligence Agency and the developer of a deception-detection methodology that's employed throughout the U.S. intelligence community. That methodology is now being used in the private sector to detect deception in a wide range of settings, including the corporate environment.
Houston has analyzed a transcript of the July 12 Infosys earnings call that I wrote about in my post, "Did Clients' Angst over Alleged Visa Fraud Hurt Infosys' Earnings?" This is the conclusion he drew:
Based on the behavioral analysis of responses by Infosys management to questions related to the ongoing visa issue, it appears that the company has been affected by changes in the visa process, and that those changes are the source of significant concern for Infosys management.
To give you an idea of how this works, here are the responses to three questions posed during the call, and Houston's identification and analysis of the deceptive behaviors associated with them that led him to draw that conclusion:
Question: There is definitely some evidence that there are increased obstacles for getting U.S. visas approved and I know NASSCOM is also trying to address this issue with the U.S. So, can you give us any update on how many additional U.S. visas you've been able to secure in the last month or during the June quarter, or any sort of general update on how that U.S. visa approval process is going for the company?
CEO Kris Gopalakrishnan: No, I cannot, unfortunately, give you those details. All I can say is that this quarter we grew. So, we are able to grow the business in this environment.
Deceptive behaviors: Refusal to answer; exclusionary qualifier; convincing statement (statement made to influence perception rather than to convey truthful information).
Behavioral insight: Based on the behaviors exhibited, this question clearly hits a nerve with the CEO. His refusal to provide the information, coupled with his effort to convince the questioner and others on the call that they should not be concerned about the visa issue because Infosys has been able to continue to grow its business, is significant. These behaviors, including the CEO's refusal to even address the question, suggest that this issue is a serious problem for Infosys and one that it has yet to solve. The CEO's refusal, combined with his use of the phrase "all I can say" to preface one of his statements, raises the question of what it is that he can't say. At a minimum, whatever he is not saying appears to be serious in his mind. Otherwise, why isn't he willing to share it with investors? If I were a shareholder, these behaviors would lead me to wonder if whatever the CEO feels he can't say will have a significant impact on the company's financial performance.
Question: Can you give us any outlook in the U.S. visa approval process, I mean to the extent that you agree that the approval process has become tougher, rejection rates are higher and information requests have been up and so on. I mean do you expect that to be resolved over the next several months or could this be an ongoing issue from what you can tell so far?
CFO V. Balakrishnan: NASSCOM, which is an industry body, has clearly talked about higher degree of rejection for the industry. They also talked about delays in getting visas for some of the companies. I think large companies like us who have credibility, we're able to get our visas. We have enough visas in the system. We also plan in advance and make sure we get visas on time, so that it does not hurt our business. So, we have not seen any material disruption on the visa front, which will affect our business now.
Deceptive behaviors: Convincing statements; exclusionary qualifiers.
Behavioral insight: It is interesting that the CFO, rather than the CEO, elects to tackle the follow-up question regarding the visa issue. The CFO exhibits deceptive behaviors similar to those of the CEO. Perhaps most significant is his qualified statement that there is no "material disruption on the visa front." What the CFO is really saying here is that the visa issue is causing a problem, however management appears reluctant to reveal the degree of disruption. Management's reluctance therefore indicates the problem is having a much greater impact than it's willing to disclose. The consistency and growing volume of deceptive indicators regarding the visa issue reinforces the behavioral insight that management has not shared the entire story here regarding the impact that changes in the visa process are having on Infosys' operations.
Question: So in your inventory of visas, you have enough of the right visas for the right types of skill sets, for that to not be a disruption anytime soon. Is that the way to look at it?
CFO V. Balakrishnan: Yes, we plan in advance. We make sure we have the visas for the right skill of people, so that it doesn't impact our business.
Deceptive behaviors: Failure to deny; convincing statements.
Behavioral insight: The questioner is attempting to pin down the CFO and have him commit to the position that the visa issue is not now and will not in the near term be a cause of disruption in the company's operations. Interestingly, instead of making a definitive statement that this issue is not causing and/or will not cause a disruption, the CFO seems to take advantage of the poorly worded question. The CFO simply responds, "Yes" to the question of whether this is "the way to look at it," which appears to be an opinion, as opposed to a definitive assertion. In addition, the CFO continues to try to persuade listeners that Infosys is unaffected by the visa issue with the statements, "We plan in advance" and "We make sure we have the visas for the right skill of people, so that it doesn't impact our business." Collectively, the volume of deceptive indicators observed in response to this series of questions regarding the visa issue likely reflects a significant level of underlying concern, and points to additional questions that shareholders should be asking. These include: