We want to be on top 10 global list, says Infy founder

By : |June 20, 2006 0



NR Narayana Murthy, the co-founder, chairman and chief mentor of Infosys, is
resting easy. With the company’s silver jubilee nearing, he has a lot of reasons
to rejoice.

The company closed 2005 revenues at $2.2 billion and continues to deliver over
30 per cent growth every quarter. While it took 23 years for Infosys to touch
the $1 billion milestone in 2004, it made another billion in less than two
years. Murthy, who turns 60 in August this year, revealed that he would retire
from chairmanship of the IT major, but would continue to play a role in the
company as non-executive chairman.

                                 

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In an interview with Priya Padmanabhan of CyberMedia News, he shares his
thoughts on Infosys’s 25 years of existence, the global delivery model (GDM) and
the company’s future plans. Excerpts:

When you started Infosys, you envisioned creating a hundred Indian
millionaires? What is your vision for the next 5-10 years?

When we set out to build the company, we did not look at revenues, market cap or
profits but wanted to build a respectable company and seek respect of customers
and employees. The objective to create wealth was not stated explicitly.

The goal is to get to the next five years. Like they say, the reward to winning
a quarter-final is making it to the semi-final. So it is more about moving the
goalpost. We want to be on the list of 5-10 top companies in every market in the
world in categories like best employer, best managed company, best in corporate
governance. In India, we have already received such honors. Our goal is to
increase number of customers, employees and investors, and get bigger projects.

There was recent media speculation about Indian IT services company would hit
the $10 billion revenue mark first. Who do you think will make it first?

The company to get there first would be one that is becoming more relevant to
the customer and secondly, one that enhances the per capita revenue
productivity; one that attracts and retains better quality employees; one that
controls costs, brings in innovation and creates an environment of openness and
meritocracy.

About 98 per cent of Infosys revenues are from exports and only 2 per cent
from the Indian market. Are you planning to increase business from India?

Infosys was started as a global software services corporation that sources
skills and capabilities from the cheapest locations and sells the services where
markets are not limited by national boundaries. We have been targeting the
Indian market with our core banking product, Finacle, which we developed in
1989. We have got some good installations in banks in India. However, we feel
that the Indian market is not mature enough especially in the process of
estimation.

(Murthy cites the example of a major Indian project, which attracted three
bidders including Infosys. Infosys quoted the highest value for the project
while the other two companies quoted less. The project went to the lowest
bidder, but the customer realized later that the deal value escalated as the
project progressed and that Infosys had estimated the right value)

They accept low prices and projects don’t deliver because they cost money. Only
when companies improve their estimation capabilities will the Indian market get
mature.

What are some of the memorable occasions at Infosys that you cherish?

There are many. Like the first time we applied for a computer, when our first
employee went abroad, when we got our first non-founder employee joined us in
Pune, when we signed on our first customer, when we started up our new office in
Bangalore in 1994, our listing on the national stock exchange and trading on it,
setting up the Infosys Foundation, when we acquired a company in Australia,
setting up Infosys Consulting, touching $1billion in revenues in 2004 and when
we reached the $2 billion mark recently.

What are the challenges that you faced?

We faced difficulties when we started. Till about 1990, it was very difficult to
set up data communication lines and even phone lines. It took two years to
process a computer application. At one point, we almost came close to selling
off the company. But it all changed with the 1991 economic reforms.

Another sad moment for me was when we had to let one of our senior colleagues
Phaneesh (Murthy) go because of a sexual harassment lawsuit. He was a very
promising and competent person. Other regrets were whenever we have lost
projects despite doing everything right. I think God was not on our side in
those times.

You took 23 years to reach the $1 billion revenue target with more than
30,000 employees. You made the next billion in less than two years, and today
Infosys is around 52,000 strong. What is the kind of scale you require to get
faster growth?

There are services that cannot be automated. Our strategy is to do whatever it
takes to be unique in the market place. We need to build information systems and
set up interfaces. We want to create our own unique rules of dealing with
customers and investors. We are using speed, imagination, and excellence in
execution in a way that is relevant to customers. That’s when a company can
bring differentiation in the market place. We have a program called InfyPlus,
which is all about making Infosys more responsive to customers, to be innovative
and enhance quality of services for customers.We are also leveraging on the
global delivery model and applying it to areas like consulting, which
traditionally has been an on-site activity. We are delivering some of the
consulting aspects such as preparation of proposal, research and analytics in
India. We are applying GDM to bring higher capita per person to the company.

There are some market concerns about the increasing number of foreign
stakeholders in the company. What is your take on that?

The government has passed a resolution around 10 years ago allowing this. Even
if Infosys is 100 per cent owned by foreign investors, we don’t care… As long
as we continue to add value to India, create jobs, create export revenues and
enhance the brand value of India.

With the Global Delivery Model (GDM) becoming mainstream, what kind of
differentiation and positioning would Infosys go for now?

We are working on a new service delivery model, which we term as
“Collaborative distributed delivery model.” The collaborative model will involve
distribution of various aspects of a project based on the competencies of each
center. In this, we would make use of talents and skills from different parts of
the world, where virtual teams would use technology to deliver various
components of the project. For example, software architecture would be handled
in the UK while functional design would be developed in India and hardware
engineering would be done somewhere else.Secondly, IT services companies will
also learn to leverage the “power of time differences” in a better way and solve
problems in a relay fashion. In around 10-15 years time, across a 24-hour work
day you could have various centers working in an assembly line mode to execute
projects.The software engineering and technology team at Infosys is trying out
these delivery models. We had first articulated the idea of the Global delivery
model, which has now gone mainstream. I’m sure we will be the pioneers in this
new delivery model as well.

Why is Infosys conservative around M&A’s, and also while bidding for projects
that involve ownership of assets and employees?

We don’t believe in acquisitions to achieve toplines. We are more enamored by
bottomlines. Most acquisitions by companies are failures. At our present rate of
expansion, we are one of the fastest growing Indian companies. We have a team
that looks at acquisitions and we have looked at hundreds of them. But we are
interested in something that is complementary to Infosys. Ownership of assets is
not easy. Being an Indian company, it is difficult to taken on people from
countries outside India. The labor laws abroad are also tough. We’d rather look
at modular outsourcing where an outsourcing contract is split into independent
modules. We bid for projects where we have high competencies and the least risk.

Do you plan to look at the products space seriously?

We have a good core-banking product Finacle, which is now deployed in 47
countries. We are trying to enhance capabilities on Finacle and compete in the
US market. So far, we have done well in Asia, Europe and Latin America. Yes, we
want to create products. But if we are going to do it, we want to learn it well.
We always under-promise and over-deliver.

Do you have plans to retire soon?

According to our company regulations, the retirement age for chairman is 60. I
turn 60 on 20th August and I will retire as chairman. However, I will become
non-executive chairman of the company from 21st August. The tenure of this
non-executive chairmanship is five years. My new role will be to ensure that
board members discharge their functions well, ensure company governance and see
that there is no violation of ethics or norms. It’s an ombudsman like role and I
will also see that the company is insulated from risks.I spend just around 5-8
days in a month at the Infosys campus. I am a pro-active person and because of
that, I tend to be involved in various aspects of business. When Nandan (Nilekani)
took over in 2002, I decided to slowly wean away from direct involvement since
people would continue to come to me than Nandan.

What are you doing to groom future leaders from Infosys?

The company has ensured a good succession plan. Besides (TV Mohandas) Pai and
Nandan, we have capable people like Kris Gopalakrishnan and Shibulal. Around 98
per cent of the company reports to Shibulal. We are identifying and grooming
potential leaders in the company through the Infosys Leadership Institute-around
45 tier -one and 135 tier-two managers.

© CyberMedia News

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