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Mr. Narayana Murthy and Infosys

A Case Study of Indian Values

Inside the Infosys multiplex. Photo: Tarunactivity/flickr

Inside the Infosys multiplex. Photo: Tarunactivity/flickr

A Case Study of Indian Values

After India abandoned its planned economy in 1991 and embraced global
capitalism, many new technology companies sprang up all over the
country, especially in the Bangalore area. One of the most successful
of these start-up companies was Infosys, an information technology
company launched by Mr. Narayana Murthy and six of his friends in 1981
with the support of Mrs. Sudha Murthy. In 2000 Infosys, the first
Indian company to be traded on NASDQ, was worth about U.S. $27 billion.
This case study aims to demonstrate how any Indian may be at once very
modern and also draw upon the millennia of his or her rich cultural
tradition. As Gandhi did before him, Murthy has original ways of
combining features of his Indian legacy.

About Narayana Murthy
Narayana Murthy was born in 1946, in Karnataka, India. He acquired a degree in Electrical Engineering from Mysore University, and later studied Computer Science at the Indian Institute of Technology (IIT) in Kanpur.

In 1981, Narayana Murthy founded Infosys Technologies along with six of
his friends. None of them had the money to start the company, but
luckily his wife Sudha Murthy, who was an engineer with Tata
Industries, had saved 10,000 rupees (Rs)--about 250 U.S. dollars--that
she donated to start the company.

Since its inception Infosys Technologies developed quickly and has done
well not only in the domestic stock markets but also in the
international markets. In March 1999, it became the first
India-registered company to be listed on an American stock exchange
(NASDAQ: INFY). For the year ending March 2000, it earned $61.3 million
on sales of $203.4 million. During the downturn on the
stock market in early 2001, Infosys growth slowed, but the company was
still enjoying substantial growth.

In a poll conducted by Asiaweek, Mr. Murthy was selected one of the 50
most powerful people in Asia for 2000. Fifty percent of the respondents
in an online poll conducted by The Economic Times voted him the best
CEO of India. (Sawhney) As of Jan 8, 2000 when Infosys Technologies’
share price crossed the Rs 16,910-mark on the Bombay Stock Exchange,
his 7.7 percent holding in the company is valued at Rs 4,306 crore, or
just about $1 billion. Although Mr. Murthy once remarked that being
labeled a "national icon" can wreak havoc on your ego, he continues to
cling to his roots, staying in a house in the middle class area of
Jayanagar in Bangalore with his engineer wife Sudha and their two
children, Akshata and Rohan and to draw on insights from his early
experiences and from the Indian tradition.

The fifth of eight children, Murthy was born into a modest family. His
father worked as a school teacher in Mysore. When asked about the role
models that inspired his career, he replied: “Those days our role
models were our teachers, both in school and university. They taught us
to be inquisitive and articulate. You have to imagine a lower middle
class family in a district headquarters in the ’60s. My father used to
tell us about the importance of putting public good before private
good; mother would talk about sacrifice and truth. Beyond the basic
values of life they didn’t discuss too much about our careers.”
His uncle was a civil servant and his father was very keen that he take
that up as a career but somehow that didn’t appeal to him. He took a
degree in engineering at a local college and hoped to become a junior
engineer in a hydroelectric power plant, Nehru’s temples of modern
India. But instead he got his Masters at ITT Kanpur, where “We were
introduced to computers – that wonder machine – and I was hooked.”
Although offered higher paying jobs, he took a job in Ahmedabad because
Prof. Krishnayya, who worked at a the Indian Institute of Management,
told him of “this great, modern mini-computer that he was going to
install and that it would be the third business school in the world to
install a time-sharing system after Harvard and Stanford. He also said
that the atmosphere was collegial, “we’d work 20 hours a day and learn
a lot. Taking this job at a salary of Rs 800 a month was the best
decision of my life.”

When asked the major influences on his quality of leadership, which he
rated a 6 on a scale of 10, Murthy replied: “My father ... was a great
fan of Western classical music. On Sundays, he used to play music for
an hour. One day I asked him: why should I listen to this alien music?
He said: What appeals to me is that in a symphony there are over 100
people, each of whom is a maestro, but they come together as a team to
play according to a script under this conductor and produce something
divine. They prove that one plus one can be more than two. It’s a great
example of teamwork.”

When asked whether he ever had a sense of giving up, he replied “There
came a time in 1990 when we were floundering. We had offers to buy us out
which my colleagues thought we should consider since we weren’t making
too much headway. We had a 4-5 hour discussion and I could feel the
sense of despondency. So I pulled a fast one. I said guys don’t worry,
I’ll buy you out. I know it’s going to be tough in this country but I
have no doubt that we’ll see light. In minutes, they all said we’re with you. From now onwards we
will never discuss the issue of closing down, getting tired or giving
up. This marathon will be restarted.

“Liberalization brought more companies and more competition, and to
ensure that our staff would not leave, Infosys set out to find out why
their employees might want to leave us and see if they could create
those conditions in Infosys.

“A successful corporation is one that introspects about internal
transformation first before blaming the context, competition or
external circumstances. We increased our salaries, we introduced a
stock option plan so that our people would have much more money than
any other Indian company. We also decided to make it a fun place to
work because our assets walk out of the door every evening mentally and
physically tired. We must make sure that they come back with a zest to
work.

“Thanks to the emergence of companies like Amazon.com, the traditional
companies have realized that they have to shape up or ship out. So
there’s a tremendous emphasis on leveraging the power of the Internet.
We understand online transaction processing very well – we have done it
for 18 years. E-commerce requires the ability to mount a robust and
secure an online transaction processing engine, a certain application
layer. The only difference is that you have to create a user-friendly
web front end which skill we’ve developed in the last 2-3 years. We
have a big advantage of over new e-commerce companies because the
design and implementation of a high performance engine is something
we’ve been doing for years. U.S. corporations are in a hurry to get on
to the e-commerce bandwagon and this is a clear opportunity for us.
“My vision is to make Infosys a globally respected software
corporation, delivering the best of solutions employing the best in
class professionals. That’s different from a multinational corporation,
which generally has subsidiaries in different countries, manufactures
and sells there. As a corollary to that, I want it to be a place where
people of different nationalities, religions and races will come
together and compete in an environment of harmony and meritocracy. We
believe that the local people are the best people in a given
environment.

When we visited him, his company had just lost billions of dollars of
stock value and projected growth. Earlier he had stated: “I tell my
colleagues not to look at the stock market. What we should worry about
day after day is to provide quality products on time, within budget to
our customers. We must show transparency to investors, not violate any
law of the land, and be in harmony with society. That’s our main
charter and we should stick to it. The stock market may or may not
reward us even if we do that. This is ephemeral. We should not be too
ecstatic about it today or get despondent if it falls tomorrow.”
When asked what advice he would give to the next generation of
entrepreneurs, Murthy replied: “Leadership is about making what seems
impossible, possible; about changing the perception of what reality is.
The reality in India is dirty roads, pollution, bad traffic, etc.
Reality is what we make it; it is for us to change.

If you give confidence to people they can achieve tremendous things. We
have run this company as professionally as any other corporation in the
world in terms of the principles of corporate governance, in not using
corporate resources for personal conveniences, with respect for the
professional.

“Early to bed and early to rise and work like hell. Those people who
have entrepreneurial strengths need to get a marketable idea and
understand the window of opportunity for it. They have to bring
together a team that has mutually exclusive, but collectively exhaustive
skills and work out a value system. Entrepreneurship is about running a
marathon, not a 100-meter dash.”

What does money mean to Narayana Murthy?

“Beyond a certain level of comfort I think one’s wealth should be seen
as an opportunity to make a difference to society. My colleagues think
so, too. The power of money is the power to give. Obviously it will
have to be done in a gradual manner over the years, but there’s no
doubt that a majority of what we have will be given to public causes.”

What drives Murthy then if not money? “There’s a saying in America that the reward for winning a pinball game is to get a chance to play the next one. In most situations, the
pleasure comes from the journey, not the destination.”