Podcast | Deep Dive — A foundation of conscientious growth: The Infosys story

At a time when anonymous corporate funds  in the coffers of multiple political parties are beginning to raise questions, global software major Infosys has decided as always to invest to chart a different path. And to invest in something that will leave behind a lasting legacy. This Saturday, it was reported that the Infosys Foundation has offered to give Rs 200 crore to the Bengaluru metro network project. This information was shared by none other than the Karnataka Chief Minister HD Kumaraswamy himself.

The Foundation’s contribution will be used to build the Konappana Agrahara metro station and metro track of the Bengaluru Metro Rail Corporation Ltd (BMRCL), stated an official release.

The face of the initiative is Sudha Murthy, wife of Infosys founder NR Narayan Murthy. Sudha in her own right, is a social activist, an author and a voluble spokesperson for positive societal change. Set up in 1996, the Infosys Foundation has routinely supported various initiatives in the fields of healthcare, education, rural development etc.

Appreciating the Foundation for this initiative which squarely places the company on the side of inclusive well-being, the Chief Minister lauded chairperson Sudha Murthy for inspiring other corporate entities to follow suit  and do their bit for corporate social responsibility.

Not just this, the Foundation will maintain the station for 30 years!

This is Rakesh and as you may have guessed by now, on Digging Deeper today, we will address yet another great Indian business family and yes, today we will talk about Infosys.

Before we delve deep into the history of the company, let us try and examine its core values.

One of Narayan Murthy’s most famous quotes is, “The real power of money is the power to give it away”. This ties in with the long enduring Infosys philosophy of “Compassionate Capitalism.” The kind that generates profits and money and ploughs it right back from the milieu it sprung from.

Mr Murthy has often underscored the difference between mind and mindset. Meaning, a thought has no power till it becomes habitual and if channelled properly, a positive mindset can turn, relative impossibility into a convincing possibility.

He is also a great listener, advocates keeping one’s ears open for valuable advice from unexpected sources, and welcomes chance events that sometimes open new doors.

He has also repeatedly emphasised the importance of  making Infosys into a place “where people of different genders, nationalities, races and religious beliefs work together in an environment of intense competition but utmost harmony, courtesy and dignity to add more and more value to our customers day after day.”

This statement reveals how easily and naturally the founder ties in values of inclusion with the manner in which the company conducts its business.

He also values human capital above everything else and was once quoted as saying, “Our assets walk out of the door each evening. We have to make sure that they come back the next morning.”

Performance, respect, dignity, humility and grace are keywords in Infosys’ organizational vocabulary. A lot of this clarity comes from Murthy’s middle-class background that taught him to work hard and keep his feet on the ground.

How the Infosys story began

Infosys was born on July 2, 1981 in Pune by Narayan Murthy, Nandan Nilekani, N S Raghavan, S Gopalakrishnan, S D Shibulal, K Dinesh and Ashok Arora, all former employees of Patni Computer Systems. The company was then called Infosys Consultants Private Limited and changed its name to Infosys Technologies Private Limited in April 1992 and to Infosys Technologies Limited when it became a public limited company in June 1992. It was later renamed to Infosys Limited in June 2011.

In 1983, it relocated its office to Bengaluru.

That big dreams don’t necessarily need huge investments was exemplified by this fledgling, ambitious start-up that began with the initial capital of just Rs 10,000  borrowed from Sudha Murthy.

The company’s first office was the front room of Murthy’s home. Its registered office was in Raghavan’s home.

Infosys’s first employee was NS Raghavan. Murthy was fourth and the team could not afford a computer till 1983 and their first computer was a Data General 32-bit MV8000.

In the initial years, the founders were busy writing codes, hoping to dent the American market.

Infosys found an opportunity soon enough to enter the US market through a company called Data Basics Corp. Its role was to serve as a ‘body-shop’ which basically means that it was develop on-site, specific software for US based customers.

And then came the significant move of Infosys forming a joint venture with Kurt Salmon Associates to handle marketing in the United States.

This partnership however collapsed in 1989, leaving Infosys in a tough situation.

It was a make or break time. After eight years of struggle, the company had nothing to show for its toil while peers who had stuck to cushy corporate jobs had all the visible tokens of success. Sudha Murthy once shared how her husband never had enough money and kept borrowing from her.

The end of the venture affected the partners too with one of the founder-partners — Ashok Arora — quitting the company.

Murthy famously told them all, “If you all want to leave, you can. But I am going to stick (with it) and make it.”

So as you can see, charting the road less taken made all the difference, as did Murthy’s understanding of the key difference between mind and mindset. Thought and conviction.

Not surprisingly, the rest of the crew stayed on and went on to tell the tale of Infosys’ fabled journey into unimaginable success.

And as it turns out, Infosys went on to earn about two-thirds of its revenue from the United States. The company also went on to serve corporate clients like New York Life, GE, Nortel, Reebok, Visa, Boeing, Cisco Systems, Nordstrom and many more.

Infosys became the largest publicly traded IT services exporter in India, and to provide services to 315 large corporations in the US.

Infosys also pioneered the Global Delivery Model (GDM), a disruptive force that sparked off offshore outsourcing in India.

Infosys was also the first Indian company to list on the Nasdaq stock exchange in 1999.

By 1999, the company’s share price of Rs 8,100 was the costliest in its time.

By 2011, Infosys and its subsidiaries had amassed over 133,560 employees.  In keeping with its policies of representation and inclusion, Infosys’ workforce of  200,364 employees in March 2017, had a percentage of  36%  women and employed people from 129 nationalities.

The expansion and beyond

 Infosys is today the second-largest Indian IT company going by its 2017 revenues and 596th largest public company in the world in terms of revenue. On April 19, 2018, its market capitalisation was $37.32 billion.

Infosys Limited calls itself and for a good reason, a global leader in the  next generation of IT and consulting. It chalks up revenues up to $6.35 billion and continues to define, design and deliver technology–enabled business solutions that in its own words help Global 2000 companies. Infosys also offers a complete range of services that include business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re–engineering, independent testing and validation services, IT infrastructure services and business process outsourcing.

Infosys has established a commanding global presence with its 50 offices and development centers spread across India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan.

Infosys’s Finacle, a universal banking solution service caters to core banking, e–banking, Islamic banking, treasury, wealth management and CRM requirements of retail, corporate and global banks. It is used by over 106 banks across 61 countries.

With an eye on the future, Software Engineering & Technology Labs (SETLabs) has also established the research arm of Infosys to anticipate and create the technology of tomorrow. Infosys SETLabs is involved in cutting edge R&D and in researching Malleable Architecture, Pervasive Access, Flexible Processes and Personalized Information.

In July 2014, Infosys started a product subsidiary called, EdgeVerve Systems to focus  on enterprise software products for business operations, customer service, procurement and commerce network domains.

We are of course, just skimming the surface of infosys’ multiple business initiatives.

In 2012, Infosys was ranked 19 amongst the world’s most innovative companies by Forbes.

A company that has more than just business on its mind

 To invest in world class education and groom the next generation of innovators, in 2002, Infosys created the world’s largest corporate university, the Infosys Global Education Centre in a sprawling  337 acre  Mysore campus  with over 200 classrooms. By June 2015, it had trained around 125,000 engineering graduates.

In 1996, Infosys established the Infosys Foundation. The vision was to invest in the unattended sections of society and to address issues pertaining to healthcare, education, culture, destitute care and rural development. Its span of activities today includes Karnataka, Tamil Nadu, Telangana, Andhra Pradesh, Maharashtra, Odisha, and Punjab. Its American arm, The Infosys Foundation USA supports science and math education and helps under-represented students in America.

Infosys’ Global Academic Relations team explores and spearheads international research collaborations, publications, conferences, campus visits and campus hiring.

The Infosys Prize worth Rs 6.5 million, was initiated  by the Infosys Science Foundation, a non-profit trust that annually honours scientists, researchers, engineers and social scientists in India.

The man behind the legacy

 Padma Vibhushan Nagavara Ramarao Narayana Murthy has been listed among the 12 greatest entrepreneurs of our time by Fortune magazine. Time magazine has described him as the Father of Indian IT sector because of his pathbreaking work in the area of outsourcing in India. He was born on 20 August 1946 in Sidlaghatta, Chikkaballapura districy, Karnataka.

Like many bright middle-class young men, Murthy studied electrical engineering at the National Institute of Engineering, University of Mysore, and then went to do MTech at the Indian Institute of Technology Kanpur.

Murthy initially worked as a Research Associate at IIM Ahmedabad and later served as chief systems programmer, working on India’s first time-sharing computer system. He also designed  a BASIC interpreter for Electronics Corporation of India Limited.

His first company Softronics failed after about a year and a half. It is then that he joined Patni Computer Systems in Pune.

Once Infosys came into being, he served as its CEO from 1981 to 2002 and as chairman from 2002 to 2011. In 2011, he stepped down from the board and became Chairman Emeritus. On 1 June 2013, Murthy was appointed as Additional Director and Executive Chairman of the board for a period of five years.

Murthy has served as an independent director on the corporate board of HSBC and has served as a director on the boards of DBS Bank, Unilever, ICICI and NDTV.  He also served as a member of multiple advisory boards and councils of several educational and philanthropic institutions, including Cornell University, INSEAD, ESSEC, Ford Foundation, the UN Foundation, the Indo-British Partnership, Asian Institute of Management and counting.

His wife, Sudha Murthy fronts, as we have said before, the philanthropic work done through the Infosys Foundation. On 1 June 2013, his son Rohan joined Infosys as an executive assistant to his father but left Infosys effective 14 June 2014. So maybe the term family business has to be used more broadly in the context of Infosys because the company is not exactly developing an empire for its heirs but for stakeholders and the next generation of technology entrepreneurs.

The rough and tumble along the way

 The success story of Infosys has not been without its share of controversies. In August 2017, MD and CEO   Vishal Sikka resigned from the company after prolonged tension between him and the board of  the high-profile founders led by Murthy. At the centre of the acrimony were issues of.. and we quote,   “poor corporate governance” unquote and questions about executive pay as well as doubts over acquisitions.

Sikka, 50, was a former German IT major SAP executive and during his three year tenure,  Infosys’ revenue rose by about 25 per cent.

In his response, Sikka attributed his resignation to, “a drumbeat of distractions and  false, baseless, malicious and increasingly personal attacks.”

Infosys also appointed independent director Ravi Venkatesan, as co-chairman amid calls from founders to diversify the board.

The board expansion came in the wake of the ongoing conflict between the founders and the management over issues such as CEO salary hike, severance package to former employees and corporate governance standards.

In 2011, Infosys was also accused of committing visa fraud by using B-1 (visitor) visas for work requiring H-1B (work) visas. The allegations were initially made by an American employee of Infosys in an internal complaint.

In October 2013, Infosys agreed to settle the civil suit with US authorities by paying US$34 million though refusing to admit any wrongdoing.

The company however remains committed to keeping its record blemish free, transparent and open to scrutiny.

Future initiatives

Narayana Murthy, has been one of the torchbearers and champions of pure sciences in India through the Infosys Science Foundation.

The foundation is now slated to play a key role in the advancement of the Laser Interferometer Gravitational-Wave Observatory (LIGO) project established by Kip Thorne, the co-winner of the 2017 Nobel Prize for Physics.

He believes that it is important to inculcate the love of science and to fan curiosity in the younger generation and one way to do that is to demystify the complex theories behind natural phenomena and to develop opportunities for homegrown science enthusiasts to exchange ideas with scientists in other countries.

He believes and we do too that if longevity is the best index to measure a company, it must generate new ideas and cultivate a family of new leaders. And Infosys is putting its money where its convictions lie by developing the skills of the next generation of thought and business leaders. Because, in its vocabulary, the meaning of family extends beyond just a shared, gene pool and includes anyone who has a dream to build something from nothing.

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