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Ironic as it is, most leaders who change the world tend to be diminutive men. Whether it was Mahatma Gandhi or Napoleon, they did not tower over people, but instead they loom over entire nations, and in some case entire civilizations. Narayan Murthy, the co-founder of Infosys Technologies is no different.
In 1981, when he started Infosys with mere $250 investment, he had one goal change the way the world views India and Indian software. In 21 years that have followed since then, he has managed to do much of that. Today, Infosys has sales of over $600 million, employs 10, 000 and has created more private sector wealth than any other Indian commercial enterprise. Infosys engineers and programmers work shoulder to shoulder with their counterparts at giants such as Microsoft, Oracle and Sun Microsystems trying to develop solutions for Fortune 500 companies. The company Mr. Murthy created now has a market capitalization in excess of $7.5 billion, making it one of the most successful companies to come out of India. And that got him on Time magazineàs Top-25 business people earlier this year.
But Mr. Murthy is not done yet. This past December, he gave up his post as the chief executive of the company relegating himself to the role of chairman. It is time for me to make way for the younger generation,2 he says. That like everything else is a strategic decision; for he now wants to spread the Indian software gospel around the world, and become an agent of change for the country.
Look at where India was prior to 1991 and where it is today, that is a tremendous progress,2 he says, as we chat in the spacious conference room overlooking a fast moving Park Avenue in New York. Mr. Murthy was in town to attend the recently concluded World Economic Forum. We have come a long way, but we have a long way to go.2 He has a point Ñ NASSCOM data shows that during 1999-2000, the Indian IT industry was estimated to have earned revenues of $ 8.67 billion – a growth of almost 50 percent as compared to $ 6.05 billion in 1998-99. You cannot dismiss the fact that this sector has created an additional 200,000 jobs and improved tertiary and secondary industries,2 he says. In the last five years (1995-2000), the Indian IT Industry has recorded a C.A.G.R. (Compounded Annual Growth Rate) of more than 42.4 percent, which is almost double the growth rate of IT industries in many of the developed countries. But when placed in the larger context, the total revenues of Indian IT industry were less than that of total sales of Microsoft alone.
We need to build on the momentum,2 adds Mr. Murthy. In his new role as Indian ITàs ambassador to the world, he wants to help channel some of the new found confidence in the Indian youth into supercharging the IT sectoràs growth. Today I see so much confidence in todayàs youth and their desire to be entrepreneurs, and to me the only way to move forward is through entrepreneurship,2 he adds. In 1990s they all wanted to be MBAs and now they all want to be entrepreneurs.2
Mr. Murthy says he is proud of the fact that the success of Infosys has provided a blueprint for the to-be entrepreneurs. Infosys has shown that you can run a global class company, with highest standards of corporate governance and that is very powerful,2 he says. Less government just might be his mantra and he believes that the government should play the role of catalyst and calls for complete liberalization and opening of the economy. When we do commerce with the outside world, we can improve our results, increase our exports and more than anything provide instruments of interaction with the outside world, and if we do that I am confident things will get better,2 he says.
The biggest challenge that India Inc. has today is that less than 10 percent of our gross domestic product is exported, and that is low,2 he says. In order for India to lick the problem of unemployment, Mr. Murthy believes that Indian exports have to become at least 25 percent of the total economy just like China and Brazil. If Indian economy grows at projected 8 percent per annum, in ten years we will have a GDP of trillion dollars, and exports should be around $250 billion,2 he says.
And that is not an easy task. India Inc has to create Indiaàs first multinational brand, and that is not a trivial task,2 he says. The new India Inc has to take an approach that we will be export oriented and we need to increase our quality and enhance our export capabilities,2 he professes. The only way to grow GDP at 8-percent is through putting a serious focus on services and manufacturing sector. It is the manufacturing sector where India needs to get its act together, Mr. Murthy says. Focus on more detail and quality will help it grow faster.
In fact the services sector which includes IT services has a clear blue-print, according to a study conducted by McKinsey & Co., and likely to be released in April this year. “The initial findings of the Nasscom-McKinsey Study highlight the New Growth Opportunities for Indian companies. New verticals such as utilities, healthcare, retail, transportation; new services such as BPO, R&D Services, Internet related services, Mobile Enablement and security and business continuity services; new geographies such as Germany, France, Italy and Australia; and the SME segment are clearly the next big opportunity areas for Indian companies. The Nasscom-McKinsey study will aim to outline the strategy that needs to be adopted by Indian companies to extend our success story into these new white spaces,” noted Mr. Phiroz Vandravela, Chairman of industry group Nasscom at a recent press conference, McKinsey estimated the total addressable market in excess of $500 billion.
Easier said than done! Indian software business wants to be a $50 billion business by 2009, a growth by factor of six or roughly 35 percent per annum. In the current recessionary environment the high growth is all but impossible. That is precisely the reason Mr. Murthy is worried about the future of the Indian software industry. High growth years, thanks to a booming technology sector and a strong US economy have come to an end and things are going to get increasingly difficult for Indian software business. A chunk of growth had come from the fallen angels Ñ the venture funded dot-coms and other ephemeral businesses such as application service providers. Those are all gone, and now India has to look for other avenues of growth, primarily among the large global corporations. Or perhaps develop new software applications which could be sold in the world markets.
With the exception of United States, there are not too many places where applications have come up, because US has the environment that realizes the competitive advantages through technology,2 says Mr. Murthy. Instead he thinks India has to focus on becoming more globally focused. Look today only twenty seven percent of all projects are completed on time and India can fill that gap,2 he says. In addition, India needs to wean off the dependence on United States and expand its visions to include countries such as Japan which is a huge market, not tapped because of the language barriers. He sees similar opportunities in France and Germany.
Look we have to do this fast, because from where I see it the larger masses are not benefiting from globalization and we need to figure out a way to improve the lot,2 he says, in his typical understated manner.
(an abridged version of this article was published in India West)