‘Customers want full-service capabilities, and we’re in that space now’

Meet Nandan M Nilekani, the man who dons three hats at India’s best-known software company–Infosys. He’s managing director, president and chief
operating officer there. But he garbs a low-key identity, which displays little
about the person as compared to the company.

Nilekani, the second-in-command at Infosys, spoke to Dataquest about his
company’s achievements, failures and opportunities, spanning the past, present
and future. How he saw the company grow from an idea to a Rs 1,900-crore
behemoth, and the opportunities it generated for thousands of Indian
professionals. Excerpts:

In the event of the US economic downturn, will billing pressure affect
Infy’s revenues?

In the last four years, revenue productivity has gone up from
$42,000 in the quarter ended March 1997 to $80,000 in the corresponding quarter
in 2001. That’s a 100% rise. This year, because of increased competition and
the change in the economic situation, our revenue growth will come essentially
from volume growth and not from price increases.

How long do you expect the slowdown to last? Earlier,
there was talk of a V-shaped recovery, then of a U, now an elongated U…

Nobody has a handle on the duration and attributes of the
slowdown. People have their own theories and are talking of all kinds of
alphabets–V, U, W, L… I personally think that the next two quarters are
going to be crucial. Consumer spending holds the key now. Corporate spending
accounts for one-third of the total spending, while consumer spending accounts
for the rest. If that slows down, it will positively affect the economy.
Unemployment will be another key indicator. If it rises above 5%, it will have a
negative impact on consumer spending.

In this backdrop, how do you characterize Infosys’
outlook for the coming year?

A tight market, less spending on technology, cancellation of
some orders and higher competition will characterize this year. We are on track
for the 30% growth we projected.

The current wisdom is that a good domestic-export
revenue mix is a far healthier way of doing business. Do you have a strategy
for the domestic market in any significant way in the near future?

No. At this point, the domestic focus will remain confined to
banking, where we are the dominant player. We are not considering other sectors
for the moment.

Sound strategies have remained a hallmark at Infosys.
Which, in your view, have been the turning points for the company since

We have been around for 20 years. But yes, it basically boils
down to the last ten years. The first turning point came in the early 90s when a
host of things were happening–liberalization of the Indian economy,
recognition of Indian talent by global companies, changing telecom scenario…
Infosys capitalized on all that. We built up infrastructure and quality
practices, went public, began quality HR practices, including ESOPs, and
invested in building up our brand. In the two years from 1991 to 1993, we
accelerated our rate of growth dramatically. We started out in 1981, were a Rs
5-crore company by 1991–that was it for the first ten years. In the next ten,
we have grown from that Rs 5 crore to Rs 1,900 crore.

The other turning point was in the mid-nineties when we
strengthened our sales and marketing teams, and, built up our brand value
internationally–more so than anyone else. And then, of course, we had our
Nasdaq listing. We were the first big Indian company ever to list in North
America and we set the trend for others to do the same. Another turning point
came when we emerged as the leader in setting corporate governance standards in
the Indian corporate sector. We were the first to introduce US GAAP, quarterly
reporting and a detailed annual report, with total disclosure–all this, I
think, had a significant impact on the corporate sector.

Can you share some critical situations faced by
Infosys in its journey so far?

In 1995, we faced a major challenge in that we were unable to
come to commercial terms with General Electric, our largest customer then. But
we turned that challenge into an opportunity by investing in sales and marketing
to build up a wider customer base. The current situation poses another challenge–we
are confronted with a global slowdown of economies, slowing growth of Indian
companies and competitive pressures. How do we turn this into an opportunity?
How do we become stronger? How do we use this challenge to improve our quality?

The customer today is evaluating things critically before

Return on investment now has a direct correlation to
technology spending. When we work with a customer now, we have to tell him how
the spending will directly impact his business. Also, customers are looking for
full-service capabilities–IT companies that can advise them on their problems,
design a solution and finally, implement that. The market is moving towards
large, stable, full-service companies, and Infosys is in that space.

Also to our advantage is the fact that we are becoming more
multi-cultural. For instance, at our development center in Canada, apart from a
few Indians, we’ve hired Canadians. This will lead to the comfort factor for
our customers.

What are the other reasons behind increasing
localization at the overseas centers?

Infosys wants to think of itself as a truly global
multinational–in every respect. We have 250 customers all over the world. We
also have investors from all over the world. It was a logical step then, to
employ people from all over the world. It allows us to understand local
conditions and gives us a combination of local conditions with global benefits.
It leads to more bonding and it serves the requirements of the customers better.

As an individual, what have been your highs and lows,
inside and outside of your workspace?

It has been a great journey. When Infosys was set up, quite a
few of the founders were quite young; in their mid-twenties–a couple of years
out of the college. I have seen this company grow from just an idea to the most
respected companies in the country today. And there have been much to learn
along the way.

The first and foremost lesson–have a great team with
complimentary skills. Second–have a value system and vision that is shared by
everybody. Third–be persistent, no matter how challenging the situation. And
last, but not the least–build a company culture that is focused around the
tenets of excellence and achievement.

Looking back, is there anything you would do
differently, given a chance to start all over again? Or some things that you
would now do, or undo?

It was sometime in 1991 when we really sat down and indulged
in some introspection. it was after this that our big growth came. Certainly, we
could have done that earlier. Of course, there was some stimulus from outside
(reforms initiated by then finance minister Manmohan Singh). But certainly, we
could have done that introspection a few years before. All said and done, the
role of Infosys in India has been multifaceted and transcends the company’s
business. It set a standard for companies in general and raised the bar on
employee welfare. It also laid the foundation for firing the entrepreneurial
dreams of India. People now say– Infosys did it, so can we.

Sarita Rani in Bangalore

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