[Business Today]

Published date: 17th Feb 2013

Infosys co-founder N.R. Narayana Murthy has seen it all: bootstrapping an enterprise with what is loose change today, going on sales calls riding pillion on a Vespa scooter, walking away from a GE deal because it was leaving little profit on the table, setting up India’s first mega software campus, making India’s first Nasdaq listing, setting the best governance standards in India, and leaving an enterprise with $6 billion revenue when he retired. As Infosys struggles today, Business Today’s Chaitanya Kalbag sought and landed a rare interview with Murthy. The 66-year-old spoke extensively on Infosys, its past and future, and showed he is still very clued in. Edited excerpts from the interview:

I wanted to talk to you about what you have been doing for the past two years after you stepped down from the executive role at Infosys. How do you think Infosys is doing?

Well, I am now only an investor. I am the largest shareholder. Infosys came out with a new business model, Infosys 3.0. which was to focus on high value-addition businesses. When it came out with this, the economy in western countries went down and the company was trying to introduce new ideas in a tough environment. Therefore, I believe they had lots of friction.

Also, Infosys has historically had at least 20-25 per cent higher per capita revenue productivity compared to other companies. Therefore, selling such higher revenue productivity services in a difficult market, in a market which is very cost conscious. is not easy. So, I think those are the two reasons why Infosys has had some challenges in the last year and half or so. But in the last quarter, they seemed to have pulled back a bit.

There is a growing feeling that customer-centricity has weakened a lot. What we heard from analysts is that it is extremely difficult to negotiate with Infosys …

Infosys does not sign on the dotted line. We understand every clause. Most Indian companies say, “Oh, we will sign.” They don’t seem to understand the liability. Two, we feel that whatever clauses we sign, we must fully be able to honor it if it happens. In fact, the weakness of Indian companies is that we don’t go into the details of the contracts.

There is no COO at Infosys for some time now. So, there is a lack of a clear successor.

The company has been restructured in such a way that among Bala (V. Balakrishnan), B.G. Srinivas and Ashok Vemuri, the whole company is covered. Each of these is run as a virtual company. So, the management felt that there is no need to have a COO.

There could be a battle for succession …

There are very clear KPIs [key performance, indicators] for each of those three and whosoever does best, they will select. All the three are in the running finance. There is no evidence to link Balakrishnan’s role change to the acquisition that didn’t happen. Shibulal had two words when Business Today asked him about his differences with Balakrishnan. “Good story,” he said. Balakrishnan did not want to comment.

Watching Infosys’s challenges, both on the business front and at the leadership level, from the office of his venture capital fund. Catamaran Ventures, in Jayanagar in south Bangalore, can hardly be comforting for Murthy, who likens himself to a grandparent. “Grandparents should be seen and not heard, otherwise they won’t be welcome in the house,” he says. But it is clear the leading founder is watching very closely and is not totally disengaged. The day before he met Business Today, he was invited to speak at a company strategy meeting.

Murthy is aware of the company’s problems. For instance, he acknowledges that while there is a focus on fairness, Infosys’s “laser focus on meritocracy, high-quality talent may have suffered a little bit”.

All this clear-air turbulence could just be symptomatic of a 32-year-old company that listed only 20 years ago. Some of its troubles could be put down to hubris. Murthy disagrees. There is no hubris. It is based on value system, well thought of, it focused on margins, focused on value systems… there is no hubris,” he says.

To revive its glory days, then, will Murthy return to the company and play an active role again? “I don’t think so, but who knows. If something happens to some critical people, if their health suffers, who knows? I don’t want to say never,” is his reply. “But looking at the people that are involved, their smartness and energy levels, I don’t see the need for me or anybody else to get back to Infosys.” Famous last words?