Infosys faces loss of payment over poor servicing of MCA portal

India’s second largest software exporter Infosys has been asked to fix the glitches on the corporate affairs ministry portal over the coming weeks, at least three people with knowledge of the matter said, adding that the company risks losing out on full payment for the project.
The move comes amid mounting criticism for its handling of the portal.
Infosys, for its part, defended allegations of not fixing the glitches on time and said the entire system was “performing as expected”, adding that the initial issues faced during the migration of the system had all been fixed.
“During the first few days after migrating to the new system, there were some issues which have been sorted out. There were some delays in the incorporation of some companies due to holidays. The ministry has made arrangements to clear the pendency by deploying additional assessment officers. This will take around 15 days to get cleared. Meanwhile, we would like to state that the system is performing as expected,” an Infosys spokeswoman said in an email to ET.
The ministry of corporate affairs (MCA), which wrote a letter to Infosys chief Vishal Sikka three weeks ago, says there has been some improvement in the system since then, but some problems still continue.
Pressure is mounting on Infosys to get the MCA project in order even as Niti Aayog CEO Amitabh Kant launched a withering attack on Infosys on Twitter, saying that the company had let down the entire country.
“I have cross-checked with secretary, corporate affairs. As (a) service provider, Infosys has let down the country,” tweeted Kant in response to an aggrieved user.
A government official involved with the project said the contract to Infosys was given out two years ago on ‘build-own-operate-transfer mode and was meant to upgrade the technology, which was 10 years old.
Infosys took over the MCA contract from larger arch-rival TCS. However, an upgrade of the portal in line with the new Companies Act was put live on March 27.
“Since then we have been having problems, we would have understood if they were minor in nature but the magnitude of the issues were rather large. We have taken it up strongly with the top management of the company, which has ensured quick resolution,” said the official.
The person mentioned above also said the payment for the contract is linked to the service level agreements and the ministry always deducts payment if the performance is not up to the mark.
“We always make payments as per SLA, we always deduct if the compliance is not there, this was the case even with the previous vendor,” he said. The person added that MCA is a consolidated portal for compliance requirements as well as regulatory filings. Also, the provisions of the new Companies Act had to be reflected through the new portal.
The earlier system was designed in 2006 and was Java based, which had to be upgraded with enhanced functions such as data transparency, and make it more user friendly along with making the back office operations of RoC centralised etc.
“When the transition happened, lots of issues cropped up. Some issues we can understand but that was not the case. That’s why we took it up strongly,” said this person.
Another person familiar with the project said the issues cropped up since the system had to make several new changes in the way processes functions, for example, the entire name filing of new companies was centralised, which was earlier in the domain of local RoCs that led to teething troubles that have now been sorted out. “If you look at the data, the system is performing 20 per cent better than what it was last year,” said the third person requesting anonymity.
Infosys said since the upgraded portal went live in March, the number of filings on the site had actually increased.
“Infosys has upgraded the MCA21 system to run on the SAP platform, which went live on March 27. Post the go-live, over 1,183 Indian companies have been incorporated and 1,647 limited liability partnerships have been registered. In addition, since March 27, there have been more than 2 lakh filings,” Infosys said.
“Looking at the data for the week gone by in 2015 during the same week, we had an average of 8,013 filings per day (excluding the weekend) and this week the average was around 9,759 – an increase of more than 20 per cent,” the company added.