Having his feet on the ground, Infosys chief talks of the industry’s challenges, his company’s changing focus and the new business model that will use a lot more of cloud computing.
As S Gopalakrishnan walks down the corridors of ITC Grand Central in Parel (Mumbai), lunch appears to be the last thing on his mind. He’s feeling the heat — literally. “It’s really hot here,” he remarks, adding: “There are reports that tyres of planes could burst even due to the tarmac getting overheated.” We have a quick discussion on India’s flight safety measures. He should know, being a frequent local and global flier, writes Leslie D’Monte.
Kris, as he’s better known, prefers “Indian” food. So, we chose the “Kebabs and Kurries” restaurant which boasts of clay ovens from Peshwari, an iron tandoor from Hyderabad, and a slow-simmered curry preparation of Dum Pukht besides open spit charcoal grilled kebabs.
Kris quickly dispenses with the ritual of ordering food. He orders a plate of vegetarian kebabs and a juice — I have the same, except my kebabs are non-vegetarian. “I have to travel a lot, so I prefer to eat less. Besides, the lesser time spent on making choices when it comes to food, the better. I can then concentrate on things more important,” reasons Kris.
The chief of India’s second-largest IT services firm, who will complete three years in office by the end of the month, certainly has many more important things on his hands. “Due to the downturn, most of my time during these three years has been spent on managing costs and assuring clients. I believe we did a good job,” he says, adding: “Growth is back. We have to focus on how to retain staff and maintain profitability. Fortunately, for us, customer confidence is high and we are getting business.”
But has the European crisis, with threats that the British government could cut IT spends, thrown a spanner in the works? Kris takes a sip of his juice: “In the short term, the European crisis could turn ugly, similar to how the Lehman crisis unfolded. In the medium to long term, developed countries will grow slower while developing countries will grow faster. Europe is certainly a matter of concern for IT companies. At a macro level, such crisis (referring to Europe) could even lead to wars (he’s been reading many history books of late). I hope the transition is peaceful though.”
The euro and pound, too, have been depreciating against the dollar. “Well, we do hedge but can do only so much. The rising dollar will help us while the falling value of pound and euro will hurt,” he says. “Hence, we have to strengthen our presence in other geographies too, which we are already doing. India and China will drive future growth but the shift to emerging markets also poses a challenge. On the one hand, you cannot compete on costs since costs are already low. On the other hand, clients demand high-quality services. One has to strike a balance,” he adds. India accounts for around 2-3 per cent of Infosys’ revenue.
Infosys, says Kris, is also turning to the cloud (metaphor for the Internet). “Our business model may change to having more on the cloud. It won’t be capex-driven. The capital expenditure will be borne by us. The customer will pay only for usage. It’s a transition, and there’s risk involved. Therefore, strong partnerships are required,” says Kris. He believes both public and private clouds (where a company has control over its data) will co-exist.
More From This Section
Infosys has also increased its spend on R&D (applied technology). “A lot of innovation has taken place. Take the case of FLIP — our application store for telecom operators (Infosys has struck a deal with Aircel) and Shopp360 for retailers. We also devised a TV Platform with Airtel,” he points out.
Infosys, however, has been very conservative regarding inorganic growth. (His company has been linked with rumours of big acquisitions like that of Capgemini and more recently Logica.) Kris smiles knowingly (he probably saw the question coming): “Yes, we have been conservative. Maybe, we should have been more aggressive. But you never know. Acquisitions create their own problems. Growth is fare more important because, if your growth comes down, you can even get acquired.”
Infosys, incidentally, will complete 30 years this July. How has the journey been, I ask. “This is a far more important event than me completing three years in office,” says Kris who has fond memories. Taking a small bite of the kebabs, he summarises: “We (the company) were born just around the time when the personal computer (PC), which was introduced in 1981, transformed businesses and lives. In the second stage, around liberalisation, we became part of the new India. Today, we have 115,000 employees. We believe we’re doing a good job of shaping the careers of youngsters. We are proud of our focus on values and corporate governance. Look at how quickly the IT industry could put the Satyam issue behind it. Of course, the government did a very good job in this case.”
Any regrets? “During the downturn, we could have communicated better with our employees (referring to the iRace project which was perceived as a demotion by many Infosys employees). iRace will become an industry benchmark. It provides for lateral movements and builds on capabilities across divisions. But some increments and promotions were not perceived the way we saw them. We are in the process of rectifying this. We will be giving increments this June,” says Kris.
Kris is one of the seven co-founders of Infosys. Three left the company — Ashok Arora in 1989; N S Raghavan in 2000; and Nandan Nilekani in 2009. The longest-serving CEO of Infosys, Narayana Murthy, who stepped down in 2002 as CEO, will be chairman emeritus from August 2011.
“None of us are related or studied together. We met accidentally at Patni and bonded thereon,” recalls Kris fondly, adding: “But all of us shared a very positive thing — a middle-class value system. Moreover, all of us put the company before individual aspirations.”
What happens when Kris completes his five-year term? The other two co-founders are S D Shibulal, the chief operating officer and K Dinesh, head of quality, Information Systems and Communication Design Group at Infosys besides being the chairman of Infosys Technologies Australia (an Infosys subsidiary). Both are around the same age as Kris (55-57). “We do not comment on leadership issues. But we have a strong pipeline of leaders, since we continuously groom next-generation leaders. Our executive council, which includes people like Bala (V Balakrishnan, Infosys’ chief financial officer) and Pai (T V Mohandas Pai, who is also on the board), shares the responsibility of evaluating persons who can lead the company,” says Kris.
What next? “Now we want to give back to society,” he replies. Infosys, he points out, is working with 600 engineering colleges to improve the curriculum. It is also working with educational institutes in the field of research, both in the country and abroad. The company also donates computers to schools and contributes to the government’s mid-day meal scheme. Besides, most of the board members of Infosys are either advisors or on the governing boards of educational institutions.
I’m feeling guilty by now. Kris has hardly eaten and not taken a single call. He has not even looked at his iPhone. Yes, he’s an Apple fan and even has an iPad and not a Blackberry. He uses a Mac at home too. How does he relax ever, or give time to his family? “It’s more my daughter (she’s just 11 years old) who misses me. Whenever I’m in Bangalore, I spend weekends with my family,” says Kris. But he does take “important” calls (even from us journalists) on such weekends.
I’m curious to know a lot more but I know Kris is politely avoiding this, as he keeps looking at his watch. He’s every bit a gentleman but I can’t take chances. We order masala tea before we wind up our conversation. He has to take the evening flight to Hyderabad. I wish him a “safe” flight. I tell him that I mean every bit of it. He acknowledges it with a smile.