'I do not really understand the stock market'

On Fridays at the sprawling headquarters of Infosys Technologies Limited at Electronic City on the outskirts of Bangalore, young men and women are permitted to come for work in casual attire. The six older men who run the company led by chairman N R Narayana Murthy too take to jeans. But not on all Fridays are Murthy and his colleagues are as lucky as the young geeks.

As Senior Associate Editor George Iype checked into the Infosys campus to meet Murthy on a Friday, the Infosys chairman was not wearing jeans. On the eve of Japanese Prime Minister Yoshiro Mori's first-ever visit to India's most celebrated software firm, Murthy was busily shuttling between a host of appointments. In the morning, he received a Japanese delegation. Then he had to sit with Bangalore's police commissioner to discuss the security drill for Mori's visit.

He then went around showing the campus to the finance ministry's economic advisor, Shankar Acharya. Soon Murthy was closeted in the board room for meetings with top company officials. In between, he relaxed in his office for a few minutes, listening to a CD from his Western classical music collection.

As he starts speaking, words of wisdom, peace, equality and human concerns emerged. Murthy particularly stresses on equality as he fondly speaks of the years that he and five friends set up a small enterprise, which they never imagined, would become such a huge success.

Equality may be the most remarkable quality at the Infosys headquarters where the top management led by Murthy eat along with the staff at the campus cafeteria. The Infosys founders believe in equality because the wealth they have created these last 19 years percolates down to the young employees, whose average age is 26.

Murthy is passionate on many matters. He fears that China with its emphasis on English language education will overtake India in the booming infotech sector. He wants the government, the software leaders, the politicians to act quickly — to make India one of the top developed countries in the next ten years.

"India has to run a lot faster to achieve the target. Food for the poor, shelter for the homeless, healthcare for the weak and infrastructure for the industries, India has a lot to do to catch up with the rest of the world," he says.

N R Narayana Murthy, in an enlightening and exclusive interview to rediff.com

The kidnapping of Dr Rajakumar by Veerappan has dented the image of Bangalore, considered India's infotech capital. The city closed down at a moment's notice. Do you think the episode has exposed Bangalore's vulnerability to law and order problems?

No, I do not think the Veerappan-Rajakumar episode has dented the image of Bangalore at all. After all, this is a rare thing and it has not really affected the business climate. Some schools were closed because of the safety of the children. But now it is back to normal.

Infosys was closed down for just one day, all companies were closed for just one day. We got back to work immediately after that. Since then we have had hundreds of visitors from the US, Europe, Japan etc. I do not think the kidnapping has dented Bangalore's image.

You have been a member of Government of India and SEBI committees. What has been your experience as an advisor to New Delhi's bureaucrats? Do people respond and act on your advice and ideas?

I have had and continue to have the most pleasant and positive experience with New Delhi's bureaucrats and rulers. Especially with SEBI, I had the most interesting experience. I think Mr D R Mehta and his team are a marvelous group. They made sure that the recommendations of the expert group that included me was implemented very quickly. That is an extraordinary thing.

In all my interactions with the ministries of finance, telecom and information technology, the ministers and bureaucrats have taken our recommendations very seriously. Most of them have been implemented very quickly also. I am very, very pleased with the reaction of the bureaucracy to our recommendations.

Do you think the information technology ministry headed by Pramod Mahajan is helping the infotech sector in the right direction?

I think the IT ministry is helping and leading us in the right direction. Mr Pramod Mahajan is a very dynamic person and he has brought about a lot of initiatives. For instance, the cyber laws have come into existence. He has taken several infotech delegations outside India. He has become the single window to all the government departments as far as the problems of the software industry are concerned. I am extremely happy with the functioning of the information technology ministry.

Don't you think infrastructure problems remain stumbling blocks in the way of the infotech sector's growth?

Certainly, it is. There is no doubt about that. Power, roads, telecom, airports, hotels are still bottlenecks for us to grow and compete in the world market. But I think we are solving and overcoming these problems one by one. For instance in Bangalore, the infrastructure bottlenecks are getting solved quickly.

I think the Bangalore Agenda Task Force has done an excellent job along with the bureaucrats. Other states and cities should follow our planning for Bangalore. But it is just the beginning. We have a long way to go.

Of late, Infosys stock has determined the fortunes of India's stock exchanges. Some people are sceptical that infotech stocks are grossly overvalued.

I am not the best person to comment on stock prices. I do not invest in the stock market. I do not really understand the stock market. I think you have to talk to the analysts. They will be the best people to answer this particular question.

What is Infosys's rationale behind acquisitions abroad?

Our plan for acquisitions abroad is a strategic one. It is basically to enhance the topline and bottomline growth. It is to bring complementary values. Acquisition will enhance the pace of adoption of new technologies and market opportunities. It will help us attract a high quality, multi-cultural workforce. These are some tenets of our strategy.

What has happened to Yantra Corporation, your US subsidiary? We rarely hear about the company.

What we did was to bring in venture capital people to the Yantra Corporation. We had Mr Don Feddison as chairman of the company and then we had second and third round of financing from several venture capital people of late. Recently,Yantra raised 50 million dollars from venture capitalists.

I think certainly, in the appropriate time, Yantra will go public and then you will hear more about our US subsidiary. Right now, they are busy satisfying customers.

Do you think the government should play a proactive role in promoting the software industry? Some people see it as unnecessary, even dangerous, intervention. It is believed the government's intervention led to the premature death of the hardware industry in the country.

I think the government has an important role to play in the growth of the software industry as long as it becomes a catalyst and not a controlling authority. If the government were to say where to put in place the entire policy framework for creating highly successful Indian multinationals in the software industry, that will be a great role.

On the other hand, if the government becomes a controlling authority, dictating every aspect of our operations, taking decisions that we in our board rooms should be taking, obviously that is not good for our growth.

I think in the last few years, the government has become a great catalyst; it has a very positive role. I am happy with the government's proactive role in the software industry.

China is fast adapting itself to the English-speaking world. If China catches up with English, will India lose its edge in the infotech industry?

I think if our politicians do not realise the importance of English education, if they do not popularise English education in a hurry, yes, there is a great danger of China overtaking India. Whenever I get an occasion I talk to our politicians and the authorities about the issue. I have also discussed the China angle in various platforms.

I have met various leaders who form public opinion and I have tried to explain to them the need to embrace English in a very big manner in India. Now it is up to the politicians to decide whether to remain forward or take the country to the global marketplace in the infotech sector.

Is English education the only factor to ensure that India does not retain its edge in the infotech industry vis-a-vis China?

No, English is not the only thing. We also have to increase the intake of the IITs, the IIMs, the engineering and science colleges. We have to bring information technology to the masses. We have to improve the tele-density in the country. We have to improve Internet access across India. We have to improve the availability of bandwidth. We have to improve our infrastructure. We have to develop ourself faster in many fields to ensure that China does not overtake us.

Do you think the current infotech boom in India can make us one of the five top developed countries in the world?

I think we are today 136 in the human development index. I think for us to become one among the top five in the world, it is not an easy task. The infotech boom alone cannot do it. But if you include our purchasing power, our middle class capacity, possibly we could become one of the five developed countries in the world in the coming years. But if you do not include the purchasing power parity index, we may not be there. But that cannot stop us from improving.

The fact of the matter is that we have to control our population, we have to improve access to education, healthcare, food and shelter for every child in the country.

We have to make sure that the quality of life goes up for the poorest of the poor in India.

We have to ensure that the per capita gross domestic product goes up. So even if our per capita GDP goes up from, say, 400 dollars to 1,500 dollars, that is sufficient. You do not have to be one of the top five developed countries.

What are the other fields that you think India should concentrate on to become a developed country in the world?

I think we have to emphasise on quality on all our exports. We have to enhance productivity. We have to bring about better labour laws for competing in the global market. We have to introduce automation in a big way if you want quality. We can get into manufacturing toys. We can get into electronic assembly. We can get into apparels business. There are many areas we should concentrate on.

Look at China. It has increased its exports to 200 billion dollars. China is exporting 50 billion dollars of toys every year. We have just 150 million dollars worth toys business in India. Why can't we increase the toy business ten fold?

Emphasis on the small scale industry is not going to help. Today if you want to enter the global market, you need to have economies of scale. You need investment in heavy machinery. You need investment in quality processors. So these things require lots of money and they can only be done by the large and medium industry, not by small scale industries.

Which Indian company has impressed you or inspired you most?

Oh, there are many Indian companies that have impressed me. The longevity of Hindustan Lever, the compassion of TISCO and TELCO, the dynamism of Reliance and the Ambanis, the patriotism that Bajaj has shown, the quality orientation of the TVS group. I have been inspired by all these companies for different reasons.

Infosys was the first Indian company to share its wealth with its employees in the form of employee stock options. Do ESOPs really help in retaining talent?

There is no doubt about it at all. The employee stock option has helped Infosys retain talent. Our attrition levels are less than half the industry level. I think at the end of the day, in addition to retaining talent, sharing our wealth with employees has been the philosophy of Infosys's founders.

We believed that we have to share our wealth with our people, who are responsible for the creation of that wealth. So for us in Infosys, employees stock option is a philosophical issue rather than a retention instrument. Of course, it has helped retention. But our philosophy is that the power and thrill of having money is the power to give away. That is our motto.

You just said the power of money is the power to give it away. Can you comment further?

I think you know you can use money only so much to buy new cars, new clothes, to travel etc. But the biggest joy that will come to every human being is if s/he can make a difference in the world with the wealth they create. If by creating the wealth, if I can bring a smile to a large number of people, if I can improve the lot of people, then I am happy.

I think that is the true happiness. So I rightly believe and practice that the biggest power of money is the power to give to the needy, the poor and the disadvantaged.

What are you planning to do with your wealth? Like Bill Gates, are you also planning to donate it to charity?

I think we have already started many initiatives in this direction. Our charity programmes will continue.

Who is your most admired leader?

There is no doubt at all. It is Mahatma Gandhi whom I admires most. Mahatma Gandhi, because he espoused the cause and power of leadership by example.

Why did you ask your wife to quit Infosys when you founded the company?

Actually she was never part of Infosys. That was wrongly reported in many newspapers and magazines. She never joined Infosys for two reasons. Right from day one we always believed that the only way professionalism would be enhanced in the company is by making sure that the dignity of the profession is upheld at all points.

Two, no matter, how correct my wife is, no matter how great a manager she is, some people will think all the recognition that she gets may be because she is connected with me. So that is not fair to her. Infosys is today a success story because she supported me from the outside.

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