company. Then the fact that it was about team work. This was a group of
people with diverse skills and backgrounds, each of whom brought some unique value to the organisation. It was really all this meshing together that made it work, provided you the longevity, anchor and fulcrum around which you do things. That's what really kept us together and sometimes unique. Those ground rules which Murthy defined have provided sustainability, longevity and uniqueness to this corporation.
beginning, that was a good break. Getting great clients like Mico, Reebok
and GE was a huge break. In recent years our going public in the US in 1999 and creating a brand was a big break for us.
Q: Is it right to say the going would have been entirely different if the new policies had not come in 1991?
A: Oh, absolutely. We have been saying at every forum that the reform
momentum that the late prime minister Narasimha Rao and Manmohan Singh, then as finance minister, gave were really the turning point in our growth. The fact that licensing was abolished, taxes came down, duties came down, software technology parks were established, capital markets were liberalised, foreign investors came into the capital market, foreign
exchange became easier to get, the telecom infrastructure began to
improve - the genesis of all this can definitely be traced to the momentous
events of 1991. In many ways Infosys is the shining example of the benefits of economic reforms in India. As of last count we had 58,000 employees.
Assume that for every job we create in our industry, we create five jobs to
support this industry. That means in effect Infosys creates a quarter of a
million jobs. The economic impact of that in terms of job creation is
significant. The whole idea of economic reforms, which was to reduce the
dead hand of government on enterprise, let Indian entrepreneurship bloom,
has really been redeemed by us. Jeff Sachs was saying that the green
revolution gave India food security. Today our oil bill is $ 50 billion.
IT-ITES exports are $ 24 billion which has happened essentially from our
human capital, and the inward remittances of Indians working abroad is $ 21 billion. Just as the green revolution gave food security, these two
categories have essentially given this country oil security.
Q: In more technical terms, Y2K was a great lucky break.
A: In fact, three things happened together. One was Y2K. Clearly that was an important point. The second was the dotcom boom which coincided in many ways with the Y2K and third was the huge investment in telecommunications that was unleashed after the telecom liberalisation in the US in the nineties.
All these trends in a sense coalesced in the late nineties to 2001 and
created a situation in the technology space where demand for technology
resources far exceeded supply. This created a market opening which we were able to take advantage of. If you look at our growth rates, we went about $ 3-5 million in the early nineties, by March 1999 we were $ 121 million when we listed on the Nasdaq. Then we jumped to $ 200 million and $ 400 million in two years, riding on the back of this triple boom.
Q: Looking back, the tech bubble bursting and 9/11 at that time were real big.
Q: Looking ahead, how is life likely to be in the next 2-5 years?
There was a legacy business model based on local resources in different
silos - in each country some people working for you - to a global model
which we have essentially invented. It treats the whole world as a network
of people and finds ways to reallocate work on that network in an optimal
fashion. We think this model is fundamentally superior because it is faster,
better and cheaper. So I think in this battle our model has been proved
superior, which is why you see the legacy competitors trying to do the same thing. They have realised this is the future.
transformation partners. Whether you come from the new model like us or the legacy model, that has to be your end position. The customer wants both, all the cost efficiency, quality, timeliness of our business model. He also wants you to know how you can help him to change his business.
We also believe the transformational activities in our clients in the next several years is going to be unprecedented. All our customers are going through major change. These changes are driven by globalisation, technological innovation - telecom, demographics - more young people in Indian and China than in the west. They are also driven by the fact that technology has made outsourcing possible. Supply chain technology has made outsourcing to China possible, information technology and telecommunications have made outsourcing to India possible. The share of India and China in global GDP, which had gone down from 50 per cent in 1820 to 8 per cent in 1970, has gone up to 17 per cent in 2002. So there is a shift in the economic ratios of the world, creating more purchasing power in India and China. What this means for companies, and it affects every company in the world, is that what they sell, whom they sell -- today India is consuming 4-5 million mobile phones a month but for that you need to develop a phone that costs only $ 10 - where you produce it, where you service it - the service call may be to a call centre in Bangalore - and how you manage this global operation is changing.
You have to manage operations in a new way using information in a real time basis, monitoring everything globally. So we think companies across the world are going to do these transformations which we call the transformation to the flat world. We think Infosys is uniquely placed for this because not only have we ourselves provided the direction on this, we ourselves are a flat world company. Therefore we can be the partner of choice for our global customers to transform themselves. That's the big agenda for us in the coming years: How do we develop more and more capabilities on top of what we already have to become a transformational partner for our clients.
Q: What are the challenges you face in delivering this?
A: We need to continue to build our business knowledge, domain capabilities, consultative mindset, intellectual property, solutions, platforms, and invest in our brand as a transformation partner. We have already done quite a bit of this and the set of actions we have to take to go where we want to go are very clear. There is a cogent, articulated strategy and agenda for action and everybody in the firm is on board on that agenda and that's what we are driving towards. The agenda is essentially doing all that is required for our customers to use us more and more as their transformation partners.
A lot of it has happened but if you ask me what is the overwhelming agenda for the next two to three years, it is clearly getting that going. Of course there is a lot of other things like scale building.
Q: You don't see scale building becoming a formidable agenda? You are already adding thousands every year and if you wish to maintain topline growth, you don't see that becoming an issue?
A: It is an issue. Both the management of larger and larger numbers of
people and availability, which is a general issue in the industry. Talent,
maintaining quality, all this are challenges of managing scale. But managing
scale is something we have done before so we have to do it better. We are doing it better. This year we are investing $ 125 million in training; we
are building the world's largest corporate university in Mysore which will
have a residential capacity for more than 13,000 people -- these are all
investments in scale. But along with this we also have to do a set of
activities on the business side, what we do for our clients in terms of
becoming a transformation partner, building solutions, building information
technology, capabilities, that's the new stuff in some sense, that's the
investment we are making. So essentially we are trying to marry scale on one side with differentiation in the client's mind on the other.
Q: Prices have been static for three years now. Will not the challenges in terms of scalability and topline growth become greater if prices remain static?
A: Yes, if you provide the same value to your customers as you did last
year. That is why when we talk about leading to transformation, leading to
value change, its all about delivering value, both real and perceived, which
is better than what you gave last year. That allows the customer to
legitimately pay you more for what you do.
Q: Are there major challenges facing the country or the industry leaders taken together?
A: Before the challenges, let me list what has been accomplished in this
industry which is truly significant. We have been able to create globally
competitive companies, been able to in a sense rebrand India as a country
with an enormous reservoir of human capital, been actually able to change
the rules of an entire global industry. Today our model is the accepted one.
Every company in the world, even though not designed like us, is more and more trying to rebalance themselves and look like us. There are many other accomplishments - we have been globally competitive, established global standards, created a new environment for employees, helped in wealth creation.
There are two big challenges at the country level. One, expanding the
capacity and quality of human resources. It is about improving our colleges, adding more colleges, getting both public and private investment into education, creating merit based organisations. The other challenge is
creating a quality of public infrastructure in which you can do business
easily. It is about driving investment into better cities, roads, airports,
hotels, public transportation. These are the two macro challenges for the
industry which are beyond the scope of the industry and have to be addressed in partnership with society and government. The rest the companies will do themselves. They will have to figure out their own strategies, invest in their people, get markets. In this flat world the opportunity for restructuring is immense. More than half of global GDP is from services and a significant part of that is services which can be done over a wire. There is more and more stuff you can do over the wire provided you have the talent and the infrastructure to deliver that.
Q: Coming back to the company, the consulting business has not broken even.
A: It is still in investment mode but I think this is what we had
anticipated and it is moving absolutely on the right track. It has been a
tremendous asset in repositioning ourselves. It has been able to attract
very very high quality people from the best colleges and firms in the world.
I think more and more of our customers are wanting to do business with us
through our consulting led assignments. It is very much on track in terms of
what we want to do.
Q: So your commitment to having a set aside outfit which also looks at strategy consulting remains.
A: The reason it is a separate company is because we have a set of people
who came and all that, but in an operating model it is seamless. From the
customer point of view it is one Infosys.
Q: In consulting, is it a goal to have capability for strategy consulting? Let's say, in no matter how small a way, competing with McKinsey?
A: We are not really looking at absolute pure play strategy consulting. But
definitely we have a role to play in business transformation. Part of
consulting is to assist our customers in business transformation. We believe
that the changes brought about by our flat world have huge consequences for firms and we are well designed to help them understand that because we ourselves are a child of this flat world. We have been there, done that, we are the change that you want to be. There is a huge amount of business
transformation that is required. We can provide that consulting. I don't
know whether you want to call it strategic or not. It is strategic is some
sense and if that requires to be followed through with execution of
transformation initiatives which involve technology, that also we will be
able to give.
Q: Then I'll say that Infosys needs and is aware and is acquiring a little more of what Accenture has?
A: Oh absolutely. There is no question. We believe that we are creating a
second generation IT services company that doesn't really exist in the
marketplace because it has all the attributes of business consulting and
domain knowledge that the traditional firms have had and it is built on top
of this excellent delivery model. You need both and what we are doing is
creating a company which has both which nobody else has.
Q: Do the founders represent a sort of glass ceiling in the company, people just below that level leaving?
A: I don't know that many companies who have truly tried to create a
professional and meritocratic structure. For example, the founders' children cannot join Infosys. That's a very strong policy and value framework that we have. Of the original founders two have retired completely, Ashok Arora and Raghavan. And Murthy has retired. He will still be there very much as a mentor for all of us, but he has retired. So I think you will see over the next few years there will be all the necessary leadership transitions. We are very clear we are building a company that will outlast the founders, demonstrate its longevity and sustainability, and be there for several generations. We have a lot of very good leaders coming up and tomorrow's top leaders will be people who have come up from the system. I don't know of many companies that have an articulated plan like that.
Q: How is your style a little different from Mr Murthy's?
different, we are very different people in that sense. But there are also a
set of things which are common. The commitment and passion to Infosys,
putting Infosys above everything else, ensuring the Infosys value system is
adhered to, that business is conducted on ethical lines, transparency, the
commitment to people, employees, on all that we are the same. Creating a
culture of openness where anybody can walk in, we are all steeped in that.
The differences, I guess, are more in style. Murthy's role has clearly been
that of an institution builder, laying the foundations of this institution,
its value system, being the guardian of the value system. The greatness of
his institution building lies in the willingness to let go. One of the
failures of Indian institutions by and large has been that the institution
builder does not know when to let go. His greatness is that, even though it
must have been an extremely difficult and emotionally painful decision for
him, he believes Infosys must rejuvenate itself all the time and he is
practising it. My role really has been sort of driving it onwards, taking it
to the next thing, and I have been doing a lot of that on the business side
for the last several years. For the last four to five years, I have been
involved with driving the global positioning of Infosys, making sure that
the global brand is out there. And I am very very customer focused, I spend a substantial amount of time with them. I really like being with customers, listening to them, their problems, and think of how we can solve them. I am that way, I enjoy that thoroughly, I can spend morning to evening meeting customers. I have focused a lot on shaping the ideas of the future, both within the firm and publicly. I like cerebral stuff, so I am focused on pushing ideas. Again, I am not saying, because I am that someone else is not. But pushing the envelope of ideas and thought leadership, focusing on the brand, focusing on going to the next level of relationship with clients, that's where I have made a contribution.
Q: In purely personal terms, how will your time management change?
A: Basically, what's going to happen is that, Kris (S Gopalakrishnan) will
take on a lot of what I was doing -- which is why Kris has become the
president also - and I will take up a lot of what Murthy was doing in the
firm. But one good thing here is we have all worked together for 28 years.
Murthy's office has been next door, Kris is upstairs, we talk ten times a
day. So we have come to where I can predict what Murthy will say even before he says it. I can read his mind, he can read my mind. Brick by brick we have built this organisation, not just the founders, everybody has played a role, Mohandas Pai, so many guys have made a huge contribution to the success of this firm. It is a company based on a culture of shared values and shared vision which don't change. Even strategies. It's not the same as in a company where they bring in a guy from outside with his own ideas. When I look at some of the world's top companies, they have that continuity. When I look at the leadership of Wal-Mart and how it changed, it was really somebody who had worked for many many years with Sam Walton who took over. HSBC is a great example where there was continuity when John Bond retired and Stephen Green became chairman.
Q: Any new focus on your philanthropic agenda?
A: Let me explain first the intellectual and ideological basis for that. I
believe, if India is really going to achieve its potential economically,
socially, environmentally, it will have to largely be driven by private
enterprise. India's strength is its entrepreneurs. It is clear that we can't
do this in a state managed way. Therefore, I believe that, while the
government has a very huge role - providing the regulatory framework,
providing all citizens access to health, education, providing the framework
where business can flourish - business has to do a lot of it themselves. But
this creates enormous disproportionate wealth. You can agree that markets are good for society, but if society does not feel any particular benefit from this disproportionate wealth creation, if you don't address that, then think you end up jeopardizing the whole thing. From an ideology and sustainability point of view, it is important that wealth creators do
philanthropy in a big wa