Part I: Nilekani on Infosys's winning formula
Infosys Technologies is one of India's best known IT companies. But with N R Narayana Murthy, the main force behind the company's phenomenal rise, set to retire this week, is the company jittery about his departure? No, a smooth succession plan has long been put into place to see that the IT giant keeps up its growth pace.
And Infosys CEO Nandan M Nilekani who will take over as the company's reins is all ready to handle his new responsibilities. Nilekani talks to Subir Roy about the Infosys success story, new challenges and future plans.
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?
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 these 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.
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?
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.
Are there major challenges facing the country or the industry leaders?
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.
Coming back to the company, is the consulting business on track?
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 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.
So your commitment to having a separate outfit, which also looks at strategy consulting, remains?
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.
In consulting, is it a goal to have capability for strategy consulting?
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 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.
Then I'll say that Infosys needs and is aware and acquiring a little more of what Accenture has?
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.
Do the founders represent a sort of glass ceiling in the company, people just below that level leaving?
I don't know that many companies who have truly tried to create a professional
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.
How is your style a little different from Mr Murthy's?
You have to ask other people this question. Our personalities are very 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 customer-focussed, 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 focussed a lot on shaping the ideas of the future, both within the firm and publicly.
I like cerebral stuff, so I am focussed on pushing ideas. 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.
In purely personal terms, how will your time management change?
Basically, what's going to happen is 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.
Any new focus on your philanthropic agenda?
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 way.
In terms of areas, my wife is extremely active in education and she chairs the Akshara Foundation. She's done a lot, both financially and in terms of her time. And then she wanted to do something even bigger which is why she set up the Arghyam Foundation with a Rs 100 crore (Rs 1 billion) endowment from her personal wealth.
When we sold some shares in the ADR issue, she put all that money into this foundation of Rs 100 crore. It is going to focus on water. She has also supported this Public Health Foundation of India, which has been set up by Rajat Gupta and all these guys and the health ministry.
Her broad interests are in primary education, water, public health and sustainable development.
I have done philanthropy for the institutions I studied in -- IIT Bombay, Karnataka College, Dharwad. But from a strategic intervention point of view and the bulk of where I have given away money is on urban issues. I believe India's growth will come from cities.
For historical reasons, politically nobody has espoused cities. Everybody has talked about the humble farmer, the romantic rural thing, which is great. But the reality is that cities is where economic growth is.
And I have not looked at it just as money. To me giving money is there but it is also doing things and being a public advocate of public policy. So it is at all levels - public policy advocacy, doing things and money. To me it is a bundle of activist philanthropy, in a sense.
