Monday, September 10, 2012

The Infosys Story

The story of Bangalore of our times is incomplete without some discussion about Infosys a stand alone IT company that grew fast into a bellwether creating earnings in an unprecedented way and proving beyond doubt how few educated individuals who think differently can create large scale impact of the kinds never seen before. I attribute three factors to tyhe unparalleled growth of the growth of the internet which made international communications and data transfer cheaper and handy...two the y2k problem that put the world on tenterhooks creating excitement in the IT sector in general with some king of an euphoria experienced by the young and the old alike..and the  decision of Infosys to make Bangalore its base where there is a large pool of young knowledge and technological thinkers precocious in their outlook and being offsprings of  employees of various undertakings around the city have a scientific and progressive outlook. Bangalore is the crucible out of which Infosys  grew , sustained and thrived.

What makes Infosys special and me it is the composition of its founders who very conspicuously lacked any background in business at a fundamental level and did not have any links what so ever with formidable business names..they were ordinary people who combined themselves both at a personal and professional level to keep things going who conciously or unconciously took advantage of the situation unfolding around the world. Simply said the owner of Wipro comes from a business does TCS..but the founders of Infosys had no such leanings is what make Infosys and the spirit of it special to me.

I happenned to have a chat with Mr. Narayana Murthy  some time in 2006 and the discussion went into various aspects of the software world and I found in him a reticent thinker of the world at large and areas of human affairs in particular. All the founders had one thing in common..Education of an high order and by far and for sure and without any doubt are the first generation of Indians who had the wherewithal and the courage to think beyond the frontiers of the country and beneficiaries of the Nehruvian Economic policies and thought. When we say Nehru please add Krishna Menon to it.

I am not able to pin-point with precision what put Infosys on the path to its large scale success. When I used to work for BPL in the 1990's in the transformer factory at Koramangala I have faint recollection of having seen an Infosys office on one of the main roads of Koramangala and note that during this time most of Koramangala was owned by BPL ..BPL had its major press shop, pcb assembly, two transformer factories, a service center and not to mention a speaker assembly plant few kilometers down on the main road. As far as Iam concerned no matter what the legal description of Infosys would be today it is a family company which means it is byproduct of not just the individuals behind this venture but also their families who gave support to their men who were treading an unaccustomed path not taken by many largely accompanied by uncertainty which could lead to glory or ignominy and I endorse the families of these individuals who stood the test of time as their men waded through uncertain times and finally landed into glory. It is difficult to start and endure a company which these men and their families did to the best of their composure and abilities with possibly very little governmental support at the onset.

Infosys has come a long way. I had a moment of pride of my own when travelling to Mysore by a deluxe bus an found a foreigner sitting next to me and I asked him what he did. He said he was an American named Scot and he worked at Infosys. Somewhere I felt India has arrived with the potential to influence the economic well being and partake in the larger well being of the world at large.

Now Infosys seems to be at some kind of cross-roads many of its founders themselves leaving the organization to which they were passionately attached and the kind of demands on them changing with time and circumstances. Problems of Corporate Governance and competition set in and add to that attempts of many other global economies trying to duplicate in the short term and medium term what Infosys did and possible hostile approach to such ventures from the markets itself..all these must be forcing Infosys to reposition itself through difficult times but I believe if your basic orientation as an institution is right it would tide over difficult times. Basic orientation means an adherence to values followed by people policies and fiscal discipline. I believe an organization of the kind of Infosys at this juncture must not suffer from Strategy paralysis of some kind ..more than what it does on the ground the organization has to carefully not steer itself but upgrade itself through a series of steps into a more enlightened and well positioned global enterprise. It possibly needs to add more verticals and even get into uncharted areas and reinvent itself all over again keeping what it has gained hitherto intact.

I observe sometimes the biggest challenges of enterprises is to transit smoothly from one level of success to another level of maturity and in both these regimes the need is sometimes for a different kind of people and outlooks. My father buys a car and my brother say drives it very and safe  and before long maintenance problems set in redefining the very way the car gets driven henceforth and at the same time periodic maintenance and prediction of problems becoming dominant. See an add on skill emerging..the skill of upkeep. Some where this analogy can be extended into organizations. The car cannot be sold off as it is a source of income the flag ship must be maintained and put to appropriate use as new vehicles are purchased and it would be a folly of a serious kind if the flag ship is hived away in some act of desperation. New ventures have to be built around the old. All institutions face this crisis.

Infosys had its first level of crisis during an earlier slow down where people were benched , I dont know exactly how long ago but somewhere during the Iraq war during the closing years of the president-ship of George W Bush Jr.. and was a challenge of sorts effectively countered and considering the organization was cash rich tided over these circumstances. Presently sluggish markets and a general constrained world economy hell bent on tightening their economic belts who have regimented corporate activities seems to be the bane add to that the growth of many other new developers of software and also the possibility of repetitive maintenance orders falling away from the hands of Infosys could be creating problems. Organizations have a crucial problem according to me---to think new ventures well in advance when the current venture is progressing well..always there are many What-Ifs? that must be constantly asked when the going is good or very good and in answers to such questions ly solutions for the future.

Was there some thing erroneous about the business strategies of Infosys the closest one can get to answer this question is to study TCS vis-a-vis Infosys. Infosys in my view neglected the domestic software market. I dont see one software in the domestic market that can be attributed to Infosys..a airline reservation software or an ERP for some sector for that matter. TCS is the largest software developer of this country and TCS must be focusing on domestic software market as much as non-domestic. A large scale software developer like Infosys could also contribute to the software development activities arising from well within the domestic market leveraging on its existing experience.

Infosys must develop and also operate at various rims around the world hither-to unvisited..not with rapacity or vigorous sales skill but in a long term approach to handle small development work leading to larger orders both from corporate sectors and governmental sectors. This could happen in China, Russia, Mongolia all neighboring markets for India. There is a huge language barrier that hampers operating in these economies but almost instantly there would be some avenues for getting a foothold. Buy a small software company in China or partner with them to develop softwares in Chinese language for China. Travel times to these countries is so less compared with farther pockets of Europe or USA. Whenever a business institution looks at profits as against other parameters they are more than likely to get into a jinx some time down the line sometimes difficult to diagonize ..the problem seeming somewhere in the way the earlier journey was taken being very precise and focused and not possibly  viewing other factors that might have needed a re-look or added attention.

Who can solve the problems of Infosys if any? It is the founders themselves with the aid of committed professional people from outside who have a varied range of experience occupying positions on the board to the first line developer and testers. New domains are emerging in the software development sector in my view as the process of the way in which software is developed and tested continues to be the same. Infosys of today needs  upfront and at a very basic level remodel itself or model itself in the lines of  one or few other development or business houses apt with the times from which it can replicate strategy and put to use to reinvent itself. It must combine a short term tactical approach with a long term strategic one. Mr K V Kamath might be of succour towards this end as he can bring to the fore what he did at ICICI to the overall wisdom of Infosys.


  1. Sir i feel that infosys failed to develop a competitive advantage for itself. It should focus on developing a competitive advantage and bank on it to develop long term growth.Also, considering company's $4Bn cash pile, infosys can venture into inorganic growth by acquiring companies in emerging markets such as russia,brazil and african countries.