Six people dreamed a crazy dream 20 years ago. In socialist
India, they believed they could make money–lots of it–honestly. They
believed they could put India on the technology map of the world. And they
believed they could do something everyone desires but few manage–make a
difference. Well, they did. That dream is called Infosys Technologies and it has
grown from six people to over 9000, from one room to a sprawling 52-acre campus
in Bangalore and 21 offices worldwide. But most importantly, it has grown, as
president, MD and COO Nandan Nilekani calls it, “from an idea to a Rs
It has not been an easy journey. In 1991, after ten years in
existence, gross revenue still stood at a mere Rs 5 crore–all of it came from
really low-end grunt work. The work was as uninspiring as were the financials.
Then suddenly, things changed. The founders went through an intense bout of
soul-searching, around the same time the economy opened up. The ten years since
have seen Infosys growing from Rs 5 crore to a Rs 1,900-crore behemoth, of which
last year was easily the best.
Despite the US downturn, the company’s revenues grew by
115% from Rs 882 crore to Rs 1,900 crore. Gross profit went up by 113% and net
profit jumped 114% to Rs 293.5 crore. In simple growth terms–the company far
outstripped every other company.
While the financials did well, Infosys hit the high spots in
other areas as well. It almost doubled its workforce from 5,389 to 9,831 people;
topped various Asian and Indian surveys on human resources and business
practices (including Dataquest’s survey on ‘Best Software Employers’, May
31, 2001 issue); and chairman NR Narayana Murthy became the best-known and
most-talked-about Indian businessman last year. Last but certainly not least,
the company finally moved into the Big Five–from a DQ Top 20 ranking of Number
9 last year to Number 5 this time around.
De-risking its business
This was both a year of change and of constancy at Infosys.
To begin with, it continued de-risking its business with a smaller proportion of
revenues coming from its Top 5 and Top 10 customers. An unhappy experience with
GE–its largest customer–at one point of time ensured that the company would
never again depend so heavily on any single client. At the same time, its
SEI-CMM Level 5 certification and a sound global delivery model ensured that 85%
of its revenues still came from repeat customers. The company also began the
process of diversifying its geographical reach. The overwhelmingly US-centric
business orientation began to change as the downturn hit Indian shores in Q4–which
was when most software exporters began to question the wisdom of having all
their eggs in the US basket and started exploring the European and APAC markets.
As a result, 18.8% of Infosys’ revenue came from Europe, while that from the
US came down from 78% to 73.5%.
There have been no major changes in the verticals that
Infosys has traditionally dealt in. In line with previous years, the company
continued to be strong in the banking and financial services segment, with 33.7%
of its revenues coming from here. Some of this was foresight, some fate–financial
services remained the only sector that remained more or less unaffected by the
Other verticals where the company showed a strong presence
was utilities, transport, logistics and manufacturing (clients included Siemens
Energy & Automation and Dell). The most interesting development, though, was
the company’s relatively strong showing in the telecom sector where it bagged
some large clients. These included Vodaphone Networks–one of the largest
mobile telecommunication companies in the UK, China’s Huawei Technolgies–the
telecom equipment company–and CopperCom.
The focus in application areas also shifted. The company had
started phasing out low-level Y2K work by the fourth quarter of 1999-2000
itself. And last year, it finally moved completely out of the Y2K and post-Y2K
application areas to more complex projects, including technology road map and
processes consulting. It also began a shift from grunt work like coding and
debugging to higher-end tech services like e-biz consulting, design and
implementation. Its banking software–Finacle–made no waves overseas, but was
picking up in the domestic sector at last count.
That really was the Infosys story this year–shifting geographies, a slow
move up the value chain and greater investment in HR–all of which added up to
an over 100% growth. But some of the changes that were set into motion may have
come a little late, leading to the only sour note in last year’s upbeat story–chairman
Narayana Murthy’s announcement during the Q4 results of a drastically
curtailed 30% growth projection for 2001-2002. But then, that is next year’s