Source : CNBC-TV18 ::Dec 03, 2011 at 12:38
Narayana Murthy, a legendary and visionary in India, built a multi billion dollar empire stretching from Bangalore to Boston. He is the founder of Infosysand architect of the biggest wealth creation stories in this country.
Murthy is humble and said to live a simple life. But, beneath this exterior lies a champion entrepreneur and a powerful tech icon, who kicked of India’s first world class industry. He was recently honoured for his lifetime achievements at CNBC's Asia Business Leaders Awards.
Murthy attributes success to both character and chance. He says if hard work, sacrifice and deferred gratification make a character, to be God's chosen one is critical to taste success.
Murthy described the best index of success of a corporation as its longevity. "One of the most important instruments for ensuring longevity of a corporation is a cadre of well trained leaders. Therefore, I am confident that we will do well," he elucidated. His influence runs deep even having stepped down as Chairman of Infosys.
The well read Murthy, who quotes legendary Presidents and Baseball Stars, built up Infosys into India’s second most valued tech company and a business that created thousands of jobs, boosted exports and raised India’s image to the world.
He co-founded Infosys with just only USD 250, developing a global delivery model that became the hero of India’s priced outsourcing industry. Though many now wonder if the best times for the country’s tech giants are over, things hardly looked like this – 30 years ago. The country was just starting to liberalise its economy at the cusp of change when a new industry was born. "It was a lethal combination. This is how we realised that we could leverage the power of the Indian engineering talent to service the needs of large corporations in the US," Murthy told CNBC.
It was tough doing business in India in 1980s. It took him one year to get a telephone connection and three years for a license to import a computer. According to Murthy, those were all extreme debilitating conditions. "When we released that we had the talent and there will be a huge market opportunity, we decided to demonstrate our willpower, resilience and commitment to build a viable business," he explained.
Here is the edited transcript of Murthy’s interview with CNBC’s Chirstine Tan. Also watch the accompanying videos.
Tan: You had very little freedom to grow in the early days because entrepreneurship was tightly controlled by the government officials in India. At any point, did you lose any hope of finding success in the early days?
Murthy: In 1990, after nine years of running the company, we had an offer by somebody to buy us out for a million dollars. All my colleagues got excited.
Tan: Were you excited?
Murthy: I was not much excited, but we sat down on a Saturday to listen to everyone’s comments. Then finally, I said that I had tremendous confidence that the future will be all right and I will buy you people out. Then, they were somewhat shocked because they knew I didn't have much money. I told them that we have faith in the future and we are extremely positive and optimistic about it, and hence, we'll never ever talk of selling the company from now onwards. As much as USD 1 million at that point in time today is something like USD 32 billion in market cap, which means for every dollar that we could have got in 1990, today it's worth USD 32,000.
Tan: Infosys has scored many firsts. The first to offer stock options to employees, the first Indian company to list on NASDAQ and the first to publish quarterly reports.
Murthy: My philosophy was very clear. If a CEO doesn't know what he/she will achieve in the next three months, then he/she is not worth being a CEO. Therefore, I insisted that right from 1993-to-date, we will continue to give guidance for both topline and bottomline, so that we can create a paradigm of full transparency to our shareholders.
Tan: This crisis that we are going through appears to be worse than the last one we saw in 2008. Your biggest market the US just got downgraded, you want to grow business in Europe to 40% from 20% at a time when the region is mired in a debt crisis. Are your clients being affected by all this bad news, do you think it is going to impact IT budgets in a big way?
Murthy: We are in the business of making corporations more and more efficient. Corporations have to invest in IT, and fortunately, our customers understand that this is the time when we have to strive, or they have to strive at bringing better efficiencies. Therefore, I believe they are all enthusiastic about mounting new projects.
Tan: But because of this very uncertainty, are they delaying their decision making process?
Murthy: There is obviously an environment of uncertainty and people tend to dither a little bit more than otherwise. But we have adjusted that in our projections and that is why we have said we will grow between 16% and 19%, so we have factored all of that.
Tan: Despite all the doom and gloom, the company still plans to hire about 45,000 employees by the end of the year, can you guarantee a good pipeline of contracts to justify those numbers?
Murthy: This recruitment decision was made based on the data we have got in trenches; in terms of growth and based on the utilisation factors. One of the principles that we have adopted is to under-promise and over-deliver, and we believe that we will be able to perform to the extent that we have promised.
Tan: In other words, you have been conservative in your guidance?
Murthy: We have so far performed at least as much as we have promised or most often better than promised. To that extent you could say we are somewhat conservative.
Tan: In terms of revenue how do you expect to do this year?
Murthy: Our people have said that we will be somewhere between USD 7.1 billion and USD 7.2 billion.
Tan: Where do you think the company will be?
Murthy: Now I am not part of the company in that sense. I am not on the Board of Directors, so I don’t have access to all the information. Therefore it will be wrong on my part to project.
Tan: You are leaving at a time of intense competition, Infosys has lost its number one position to TCS and rival Cognizant is slowly closing the gap, some say it could takeover Infosys in a couple of years. Are you worried about that happening?
Murthy: Not really, I see a lot of wonderful ideas being germinated in the company and a lot of enthusiasm amongst our people. We have in fact brought the biggest innovations in this industry, in this company. I believe that as long as we focus on our customers, treat our employees well and are transparent with our investors, I believe we will continue to have a good day.
Tan: You have always said you don’t believe in buying revenues but if it came to the crunch, would you be open to Infosys making one big acquisition to defend its position?
Murthy: As long as any acquisition fits in with our strategy, we have no problems in making acquisition. But I am against just buying revenues. In other words, our strategy is that it should complement our customers, complement skills, compliment geographies. We will acquire because we have USD 4 billion plus of cash in the bank. So it’s not an issue at all. But we just don’t want to do an acquisition because it’s fashionable. We don’t want to do an acquisition because that is how we become bigger than somebody else, we don’t do that.
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