Nasir G Khwaja Munshi (Reg No: CC0015BK25AM42AAB)




This is to certify that the Project work “BIOGRAPHY OF N.R. NARAYANA MURTHY” is submitted to the college by the candidate Mr. Nasir G Khwaja Munshi bearing Reg. No. CC0015BK25AM42AAB is the product of research carried out by the candidate under my supervision in English.


Bangalore, August.15.09 Lecturer. In English Great Eastern Management School





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The Project work was carried out under the remarkable guidance of MRS. AASHA MENON Lecturer, Great Eastern Management School. I am grateful for his guidance, valuable suggestions and for the constant encouragement and co-operation. I also express my sincere gratitude and thanks to all the subjects participated in the study.




Born: Parents:

August 20, 1946. Murthy's father was a schoolteacher in Kolar district, Karnataka, India


B.E. Electrical from University of Mysore (1967), M.Tech from IIT Kanpur (1969).


He was short. He was sharp. He was the brightest boy in his class. His seniors
would ask him to solve their difficulties in Science. He could have gone unnoticed in the crowd, but once you asked him a question related to Physics or Maths, there was a spark in his eyes. He could grasp theories of Science faster than the speed of light.

He came from a poor but educated family. His father was a high-school teacher and an avid reader of English literature. He, like all the boys in the class was trying to get admission into some engineering college. The brighter ones wanted to study in the Indian Institutes of Technology or the IITs.

His uncle was a civil servant and my father was very keen that I take that up as a career but somehow it didn’t appeal to me. Those were the days when engineering was considered the in thing along with medicine. People didn’t think that being an economist or a social scientist could be a productive career.

He had got admission to the IIT by passing the entrance exam with a fairly high rank and a scholarship. But the scholarship was to be disbursed at the end of the year. I remember talking to my father who said that there was no way he could afford to pay since he was earning Rs 250 per month. He said: If you’re smart you can go to any college and be able to do something worthwhile. So I joined the local engineering college.

There was an entrance test for IIT. This boy, along with his friends applied to appear for the test. They did not have any special books or coaching. All these IIT aspirants would sit below the shade of a stone mantap close to Chamundi hills in the sleepy town of Mysore. He was a guide for others. While the others struggled to solve problems in the question paper, he would smile shyly and solve them in no time. He sat below a tree and dreamt of studying at IIT. He was then only sixteen years old. D-Day came. He came to Bangalore, stayed with some relatives and appeared for the entrance test. He did very well but would only say “OK” when asked. It was the opposite when it came to food….”OK” implied bad, “good” implied ok, and “very good” implied good!! His principle was never to hurt anyone….

The IIT entrance results came. He had passed with flying colors and the highest rank. He was thrilled! He went to his father who was reading a newspaper. “ANNA, I have passed the exam”. “Well done, My Boy”. “I want to join IIT“. His father stopped reading the paper. He lifted his head, looked at the boy and said with a heavy voice “You know our financial position, I cannot afford your expenses at IIT. You can stay in Mysore and learn as much as you want.” His father was sad that he had to tell the bitter truth, but it could not be helped. The teenager was disappointed. He was so near to fulfilling his fondest dream, yet so far. His heart sank in sorrow. He did not reply. He never shared his unhappiness with anyone. He was an introvert by nature. His heart was bleeding but he did not get angry with anyone. The day came, his classmates were leaving for Madras (Chennai). They had shared good years at school and he went to wish them good luck for their future. At the station his friends were already there. They were excited and discussing their new hostels, new courses etc.. So he stood there silently. One of his friends noticed and said, “You should have made it”. He did not reply. He just wished them. He stood there even after he could no longer see the train or the waving hands. It was June 1962 in the Mysore city. Yet he stood there motionless. He said to himself, without anger or jealousy, “All students from the IITs study well and do big things in life. But it is not the institution, ultimately it is you and you alone who can change your life by hard work“. This son of a school teacher became a pioneer of India’s software industry. He is none other than Infosys’ founder, Narayana Murthy. His motto being, “Powered by Intellect, Driven by Values“.

An Indian IT chief who's really made it big without dropping his ethical precepts by the way side is Nagawara Ramarao Narayana Murthy, Chairman of Infosys. Born in 1946, Murthy's father was a schoolteacher in Kolar district, Karnataka, India. A bright student, Murthy went on to acquire a degree in Electrical Engineering from Mysore University and later studied Computer Science at the IIT, Kanpur, India.


The Infosys legend began in 1981 when Narayana Murthy dreamt of forming his own company, along with six friends. There was a minor hitch; though-he didn't have any seed money. Luckily, like many Indian women who save secretly without their husband's knowledge, his wife Sudha-then an engineer with Tata’s-had saved Rs 10,000. This was Murthy's first big break. The decade until 1991 was a tough period when the couple lived in a one-room house. The second break came in 1991 when Indian doors to liberalization were flung open… Murthy grabbed the opportunity with both hands and has never looked back ever since. Today, Infosys is the first Indian company to be listed on the US NASDAQ. While working in France in the 1970s, Murthy was strongly influenced by socialism. The bubble was pricked, however, when he was arrested in Bulgaria on espionage charges. Today, he says: "I'm a capitalist in mind, a socialist at heart." It was this belief in the distribution of wealth that made Infosys one of the first Indian companies to offer employees stock-option plans. Infosys now has 400 employees who are dollar millionaires. In a poll conducted by Asia week, the quiet, soft-spoken man was selected one of the 50 most powerful people in Asia for 2000. And 50 per cent of the respondents in an online poll conducted by The Economic Times voted him the best CEO of India. Heading a company with the largest market capitalization hasn't changed Murthy's life-style much. The man still doesn't know how to drive a car! On Saturdays-his driver's weekly off-the Infosys chief is driven to the bus stop by his wife, from where he boards a company bus to work! Incidentally, Sudha Murthy is now chief of the Infosys Foundation, which channels Rs 50 million into charity every year. Simplicity, humility and maintaining a low profile are the hallmarks of this super-rich Bangalorean and the man is principled to a fault. Murthy's unprecedented wealth has catapulted him into the public glare. After the kidnapping of Dr Rajkumar by forest brigand Veerappan, the Home Ministry has sounded out the local government about providing Zcategory security to Murthy and Premji. Both characteristically turned down the offer. In a letter to the police top brass last month, Murthy said he was a simple man who had no intentions of annoying his neighbours and disturbing traffic with an intrusive entourage of security vehicles and personnel.


That's Narayana Murthy for you.
Achievement: One of the founders of Infosys Technologies Limited; Chosen as the World Entrepreneur of the Year - 2003 by Ernst and Young

Narayana Murthy is the Non-Executive Chairman and Chief Mentor of Infosys Technologies Limited. He is a living legend and an epitome of the fact that honesty, transparency, and moral integrity are not at variance with business acumen. He set new standards in corporate governance and morality when he stepped down as the Executive Chairman of Infosys at the age of 60. Born on August 20, 1946, N.R. Narayana Murthy is a B.E. Electrical from University of Mysore (1967) and M.Tech from IIT Kanpur (1969). Narayan Murthy began his career with Patni Computer Systems in Pune. In 1981, Narayana Murthy founded Infosys with six other software professionals. In 1987, Infosys opened its first international office in U.S.A.


With the liberalization of Indian economy in 1990s, Infosys grew rapidly. In 1993, the company came up with its IPO. In 1995, Infosys set up development centres across cities in India and in 1996; it set up its first office in Europe in Milton Keynes, UK. In 1999, Infosys became the first Indian company to be listed on NASDAQ. Today (in 2006), Infosys has a turnover of more than $ 2billion and has employee strength of over 50,000. In 2002, Infosys was ranked No. 1 in the "Best Employers in India 2002" survey conducted by Hewitt and in the Business World's survey of "India's Most Respected Company." Conducted in the same year. Along with the growth of Infosys, Narayana Murthy too has grown in stature. He has received many honours and awards. In June 2000, Asia week magazine featured him in a list of Asia's 50 Most Powerful People. In 2001, Narayana Murthy was named by TIME/CNN as one of the 25 most influential global executives. He was the first recipient of the Indo-French Forum Medal (2003) and was voted the World Entrepreneur of the Year - 2003 by Ernst and Young. The Economist ranked Narayana Murthy eighth on the list of the 15 most admired global leaders (2005) and Narayan Murthy also topped the Economic Times Corporate Dossier list of India's most powerful CEOs for two consecutive years - 2004 and 2005.



Chapter 2



It was in Pune that Sudha (Wife) met Narayan Murthy through her friend Prasanna who is now the Wipro chief, who was also training in Telco. Most of the books that Prasanna lent her had Murthy's name on them, which meant that she had a preconceived image of the man. Contrary to expectations, Murthy was shy, bespectacled and an introvert. When he invited them for dinner, Sudha was a bit taken aback as she thought the young man was making a very fast move. She refused since she was the only girl in the group. But Murthy was

relentless and they all decided to meet for dinner the next day at 7.30p.m. At Green Fields hotel on the Main Road, Pune. The next day Sudha went there at 7 o'clock since she had to go to the tailor near the hotel. And what did she see? Mr. Murthy waiting in front of the hotel and it was only seven. Till that day, Murthy maintains that Sudha had mentioned (consciously!) that she would be going to the tailor at 7 so that she could meet him... And Sudha maintain that she did not say any such thing consciously or unconsciously because she did not think of Murthy as anything other than a friend at that stage. They had agreed to disagree on this matter. Soon, they became friends. Their conversations were filled with Murthy's experiences abroad and the books that he has read. Sudha’s friends insisted that Murthy was trying to impress her because he was interested in me. She kept denying it till one fine day, after dinner Murthy said I want to tell you something. She knew what that was. It was coming. He said, "I am 5'4" tall. I come from a lower middle class family. I can never become rich in my life and I can never give you any riches. You are beautiful, bright, and intelligent and you can get anyone you want. But will you marry me?" Sudha asked Murthy to give her some time for an answer. When she went to Hubli, She told her parents about Murthy and his proposal. Her mother was positive since Murthy was also from Karnataka, seemed intelligent and comes from a good family. But her father asked: What’s his job, his salary, his qualifications etc. Sudha’s father didn't want her to marry a man who did not have a steady job… Murty was working as a research assistant and was earning less than me. He was willing to go dutch with me on our outings. My parents agreed to meet Murty in Pune on a particular day at10 a. m sharp. Murty did not turn up. How can I trust a man to take care of my daughter if he cannot keep an appointment, asked my father


At 12noon Murty turned up in a bright red shirt! He had gone on work to Bombay, was stuck in a traffic jam on the ghats, so he hired a taxi (though it was very expensive for him) to meet his would-be father-in-law. Father was unimpressed. My father asked him what he wanted to become in life. Murty said he wanted to become a politician in the communist party and wanted to open an orphanage. My father gave his verdict. NO. I don’t want my daughter to marry somebody who wants to become a communist and then open an orphanage when he himself didn’t have money to support his family. Ironically, today, I have opened many orphanages something, which Murty wanted to do 25 years ago. By this time I realized I had developed a liking towards Murty which could only be termed as love. I wanted to marry Murty because he is an honest man. He proposed to me highlighting the negatives in his life. I promised my father that I will not marry Murty without his blessings though at the same time, I cannot marry anybody else. My father said he would agree if Murty promised to take up a steady job. But Murty refused saying he will not do things in life because somebody wanted him to. So, I was caught between the two most important people in my life.


The stalemate continued for three years during which our courtship took us to every restaurant and cinema hall in Pune. In those days, Murty was always broke. Moreover, he didn’t earn much to manage. Ironically today, he manages Infosys Technologies Ltd., one of the world’s most reputed companies. He always owed me money. We used to go for dinner and he would say, I don’t have money with me, you pay my share, I will return it to you later. For three years I maintained a book on Murty’s debt to me. No, he never returned the money and I finally tore it up after my wedding. The amount was a little over Rs 4000. During this interim period Murty quit his job as research assistant and started his own software business. Now, I had to pay his salary too! Towards the late 70s computers were entering India in a big way. During the fag end of 1977 Murty decided to take up a job as General Manager at Patni Computers in Bombay. But before he joined the company he wanted to marry me since he was to go on training to the US after joining. My father gave in as he was happy Murty had a decent job, now. THEY WERE MARRIED IN MURTY’S HOUSE IN BANGALORE ON FEBRUARY 10, 1978 WITH ONLY OUR TWO FAMILIES PRESENT.I GOT MY FIRST SILK SARI. THE


WEDDING EXPENSES CAME TO ONLY RS 800 (US $17) WITH MURTY AND SUDHA POOLING IN RS 400 EACH. Sudha went to the US with Murty after marriage. Murty encouraged me to see America on my own because she loved travelling. Toured America for three months on backpack and had interesting experiences which will remain freshin my mind forever. Like the time when the New York police took me into custody because they thought I was an Italian trafficking drugs in Harlem. Or the time when I spent the night at the bottom of the Grand Canyon with an old couple. Murty panicked because he couldn’t get a response from my hotel room even at midnight. He thought I was either killed or kidnapped. IN 1981 MURTY WANTED TO START INFOSYS. HE HAD A VISION AND ZERO CAPITAL…initially she was very apprehensive about Murty getting into business. We did not have any business background. Moreover we were living a comfortable life in Bombay with a regular pay check and she didn’t want to rock the boat. But Murty was passionate about creating good quality software. I decided to support him. Typical of Murty, he just had a dream and no money. So she gave him Rs 10,000 which she had saved for a rainy day, without his knowledge and told him, This is all she have. Take it. She gave you three years sabbatical leave. She will take care of the financial needs of their house. You go and chase your dreams without any worry. But you have only three years! Murty and his six colleagues started Infosys in 1981,with enormous interest and hard work. In 1982 She left Telco and moved to Pune with Murty. We bought a small house on loan which also became the Infosys office. She was a clerk-cum-cook-cum-programmer. She also took up a job as Senior Systems Analyst with Walchand group of Industries to support the house. In 1983 Infosys got their first client, MICO, in Bangalore. Murty moved to Bangalore and stayed with his mother while She went to Hubli to deliver my second child, Rohan. Ten days after my son was born, Murty left for the US on project work. She saw him only after a year, as She was unable to join Murty in the US because my son had infantile eczema, an allergy to vaccinations. So for more than a year she did not step outside our home for fear of my son contracting an infection. It was only after Rohan got all his vaccinations that she came to Bangalore where we rented a small house in Jayanagar and rented another house as Infosys headquarters.



My father presented Murty a scooter to commute. She once again became a cook, programmer, clerk, secretary, office assistant et al. Nandan Nilekani (MD of Infosys) and his wife Rohini stayed with them. While Rohini baby sat my son, She wrote programs for Infosys. There was no car, no phone, and just two kids and a bunch of them working hard, juggling their lives and having fun while Infosys was taking shape. It was not only her but also the wives of other partners too who gave their unstinted support. We all knew that our men were trying to build something good. It was like a big joint family, taking care and looking out for one another. she still remember Sudha Gopalakrishna looking after my daughter Akshata with all care and love while Kumari Shibulal cooked for all of us. Murty made it very clear that it would either be me or him working at Infosys. Never the two of us together… She was involved with Infosys initially. Nandan Nilekani suggested She should be on the Board but Murty said he did not want a husband and wife team at Infosys. She was shocked since she had the relevant experience and technical qualifications.

He said, Sudha if you want to work with Infosys, I will withdraw, happily. I was pained to know that I will not be involved in the company my husband was building and that I would have to give up a job that I am qualified to do and love doing. It took me a couple of days to grasp the reason behind Murty’s request. She realized that to make Infosys a success one had to give one’s 100 percent. One had to be focussed on it alone with no other distractions. If the two of us had to give 100 percent to Infosys then what would happen to our home and our children? One of us had to take care of our home while the other took care of Infosys. She opted to be a homemaker, after all Infosys was Murty’s dream. It was a big sacrifice but it was one that had to be made. Even today, Murty says, Sudha, I stepped on your career to make mine. You are responsible for my success. I might have given up my career for my husband’s sake. But that does not make me a doormat…


Chapter 3



At 53, N.R. Narayana Murthy, chairman and CEO, Infosys Technologies (1998-99 sales: Rs 513 crore), heads India’s most successful Silicon Valley style start-up. Established in 1981 by seven professionals who pooled in their savings of Rs 10,000 (borrowed from their wives), Infosys has set all kinds of records. It was the first company to institute a company wide; performance based Employee Stock Option Plan that cut right across the hierarchy. This year, it was the first India-registered company to list on an American stock exchange (NASDAQ). On measures of transparency and corporate governance, Infosys is the epitome of the upright corporate citizen.

To Murthy goes the credit for first having the vision to see the opportunity in software, pick the right team and more significantly keep it together. The Infosys success is striking since all of its founders come from middle class backgrounds, had no backing of any business house but simply leveraged their brainpower and sweat equity. This is a model for the new generation of Indian enterprises in the coming millennium.

The fifth born of eight children, Murthy’s father was a modest school teacher in Mysore who could not afford to send his son to IIT. Today, his 7.7% stake in Infosys makes Murthy a very wealthy man, with an estimated networth of Rs 2,500 crore. Yet he continues to cling to his roots, staying in a house in the middle class area of Jayanagar in Bangalore with his engineer

wife Sudha and their two children, Akshata and Rohan. He was interviewed by Naazneen Karmali in Bangalore.

What made you initially choose engineering as a career?
N.R NARAYANA MURTHY: My uncle was a civil servant and my father was very keen that I take that up as a career but somehow it didn’t appeal to me. Those were the days when engineering was considered the in thing along with medicine. People didn’t think that being an economist or a social scientist could be a productive career. I had got admission to the IIT by passing the entrance exam with a fairly high rank and a scholarship. But the scholarship was to be disbursed at the end of the year. I remember talking to my father who said that there was no way he could afford to pay since he was earning Rs 250 per month. He said: If you’re smart you can go to any college and be able to do something worthwhile. So I joined the local engineering college.

Did you have any role models who inspired you in your career?
N.R NARAYANA MURTHY: Those days our role models were our teachers, both in school and university. They taught us to be inquisitive and articulate. You have to imagine a lower middle class family in a district headquarters in the ’60s. My father used to tell us about the importance of putting public good before private good; mother would talk about sacrifice and truth. Beyond the basic values of life they didn’t discuss too much about our careers. My dream was to become a junior engineer in a hydroelectric power plant, Nehru’s temples of modern India. What appealed to me was that they were non-polluting and set in pristine surroundings. Also, being an electrical engineer, there was this macho thing about building a big generator. But as a top-ranking student, people advised me to do my masters. It was not easy for people like us from a certain section of society that was considered already advantaged to get a job in Karnataka because of the reservation system and so I postponed the career decision for two years by doing my masters.

So you finally made it to IIT; what was that experience like?



IIT Kanpur was in its halcyon days. We had so many

young professors who had done their Ph.Ds in the US and had come back to India. They were all in their 20s and 30s and full of energy and optimism. Also, under the Kanpur IndoAmerican programme, IIT had links with eight American universities like MIT, Berkeley, Purdue. What that meant was that when MIT got an IBM computer they sent one to Kanpur. We were introduced to computers – that wonder machine – and I was hooked.

What prompted you to opt for the unconventional job offer from IIM?
N.R NARAYANA MURTHY: The phase I enjoyed the most was my time at IIM

Ahmedabad where I took up a job as chief systems programmer. In those days there were few computer science graduates so we got five job offers each. I had offers from hmt, ecil, Telco, Air India. The salary in those places was much higher than at the IIM. But Prof. Krishnayya of IIM who came to IIT Kanpur talked to me for an hour about this great, modern minicomputer that he was going to install and that IIM would be the third business school in the world to install a time-sharing system after Harvard and Stanford. He also said that the atmosphere was collegial, we’d work 20 hours a day and learn a lot. Taking this job at a salary of Rs 800 a month was the best decision of my life. I learnt so many things from Krishnayya. He is probably the person who influenced me the most. He taught us how important it is to aspire. We used to work 20 hours a day; go home at 3 a.m. sometimes and be back at 7 a.m. There was so much opportunity to learn. We designed and implemented a basic interpreter for ecil. I learnt what it is to be an engineer. It isn’t theory but application of the theory to solve problems and make a difference to society.

You worked overseas early in your career. What did you learn from your stint abroad?

N.R NARAYANA MURTHY: My years in Paris were the most influential years of my life. I observed how in a western country even the socialists understood that wealth has to be first created before it can be distributed. That there could only be a few leaders to create wealth.

And that it’s the job of the government to create an environment where it’s possible for people to create wealth. I realised that all this talk of socialism as practised in India was not meaningful. Our country treated communism as an ism that was completely disassociated from the reality of the context. You cannot distribute poverty. My father always told us that India had a lot to learn from the West. Also, he was a great fan of classical music. On Sundays, air used to play music for an hour. One day I asked him: why should I listen to this alien music? He said: What appeals to me is that in a symphony there are over 100 people, each of whom is a maestro, but they come together as a team to play according to a script under this conductor and produce something divine. They prove that one plus one can be more than two. It’s a great example of teamwork.

What prompted your change of heart from being a staunch leftist?

N.R NARAYANA MURTHY: After my Paris stay, I donated my earnings and with $450 in my pocket decided to return home overland. I came to Nis, a border town between the then Yugoslavia and Bulgaria to take the Sofia Express. I struck up conversation with a girl in the compartment. After about 45 minutes the train stopped, the police took the girl away, ransacked my backpack, and put me in a room that had no mattress and a window 10 ft high. They kept me there for 60 hours after which they freed me saying that since I was from a friendly country they were letting me go. I felt that if this system treats friends this way then I did not want anything to do with it. This experience really shook me.

So the socialist in you became a committed capitalist?

N.R NARAYANA MURTHY: I am a 100% free marketeer but I call myself a compassionate capitalist. While I’m very conservative in economic matters I’m very liberal about social matters. But I have no illusions about socialism. In a country like India, when we have to make capitalism an attractive alternative to people, it is extremely important for us to show tremendous compassion to the less fortunate. That doesn’t mean that you should give


jobs to people who don’t deserve them or that you should make less profits but wherever you can show compassion you should.

What was the initial business plan of Infosys based on?

N.R NARAYANA MURTHY: We were very clear that we wanted to be in India. There were many opportunities to settle outside but we wanted to create an institution in India. We knew there was hardly a market here, so we had to look at the export market from day one. At that time we had no idea how far it would go but our satisfaction comes mainly from working with bright, smart and hard-working young men and women. Our first contract was from Databasics in New York. We had worked with them at Patni Computer Systems but they wanted to set up on their own software group in India. We convinced them that we could do as good a job. My colleagues left for the US to work on-site on the project. I stayed back to set up the infrastructure. We decided to import a computer so that we could add value from India.

How easy or difficult was it in those days to get a business like yours off the ground?

N.R NARAYANA MURTHY: In those days it would take anywhere between 15 to 24 months to get a computer. We started in 1981 but our first computer was installed only in February 1984. Getting a loan was very difficult. We had worked out a time-sharing deal with mico on the basis of which anz did a project report. But anz refused to give us the loan. Several other banks also turned us down. It was just by chance on a flight that I happened to be sitting next to K.S.N. Murthy of the Karnataka State Industrial Investment and Development Corporation, and we got our break. They redid the entire project report over 14 hours a day for a week and got it sanctioned in 15 days. Right from day one our idea was to add value from India. To do that we needed certain factor conditions – computers, telephone lines. It took us a year to get a phone in Bangalaore. There was a rule then that higher priority was to be given to retired government servants than businesses. We had a contract for $3,50,000; in addition we would get an ibm compatible machine on loan from our customer. All that they insisted was that we have a telephone so that they could contact us. The customer said: Look I understand that you are a group of competent people, but if you want to do it from India you must convince us that you can establish a line of communication. So, much against our desire, we had to ship the team out. One has to go through all these experiences because it makes you understand your own frailties and also helps you develop respect for God. I’ve been extraordinarily lucky in life. I’ve received much more from society than I’ve given. I have many friends who are much smarter, much more accomplished, but somehow life has dealt me so many good cards that I can’t ascribe it to anything other than God’s grace.

Did you ever at any point feel like giving up?

N.R NARAYANA MURTHY: There came a time in 1990 when we were floundering. We had offers to buy us out which my colleagues thought we should consider since we weren’t making too much headway. We had a 4-5 hour discussion and I could feel the sense of despondency. So I pulled a fast one. I said guys don’t worry, I’ll buy you out. I know it’s going to be tough in this country but I have no doubt that we’ll see light. In minutes, they all said that we’re with you. From now onwards we will never discuss the issue of closing down, getting tired or giving up. This marathon will be restarted. Leadership is about making what seems impossible, possible; about changing the perception of what reality is. The reality in India is dirty roads, pollution, bad traffic, etc. Reality is what we make it; it is for us to change. If you give confidence to people they can achieve tremendous things. We have run this company as professionally as any other corporation in the world in terms of the principles of corporate governance, in not using corporate resources for personal conveniences, with respect for the professional.

What was the turning point for Infosys?


Chance favours the prepared mind. Just as we got

determined to run the marathon with much greater gusto, liberalisation happened. If there is one company that symbolises all the good that came out of liberalisation, it is Infosys. It did four things for us: It enhanced the velocity of decision-making in government. It used to take 8 to 12 months to get a computer and the decision depended on the babu in Delhi. After 1991,


it wasn’t necessary to go to Delhi for approvals. We could walk across to the Software Technology Park here and get licenses in half a day for $1 million. Second, equity became a viable financing option. Abolishing the Controller of Capital Issues had a multiplier effect on Indian enterprises. Prior to 1991, an officer was charged with the authority to decide at what premium a company went public and generally he always looked at the past. But capital markets are about the future. With low premiums, new entrepreneurs were reluctant to approach the capital markets. Once the company and lead manager were allowed to decide the premium, which set us free.

The government also liberalised the RBI rules for current account transactions. This meant that it was easy to travel abroad, establish offices and get consultants. Prior to 1991, we had to make an application to RBI which could take 5 to 10 days. Today I can travel in the next 6 hours. So it’s a big change. The most important thing is that government reversed the policy of foreign investment and allowed 100% ownership for MNC’s. This is the main reason why Infosys came up. At the time many hi-tech companies came in and that created competition, not in the marketplace but for our human resources. People told me that Murthy your game is up, all your people will leave. We could react in three ways: that this is our karma. We’ll grow but not much – the Hindu philosophy. The second alternative was to lobby the government not to permit 100% ownership by MNC’s. As president of Nasscom, I could have kept all these guys out. But that was against my fundamental philosophy. The third was to find out why our youngsters would want to leave us and see if we could create those conditions in Infosys. A successful corporation is one that introspects about internal transformation first before blaming the context, competition or external circumstances. Everyone bought into this philosophy and how we could bring about a fundamental transformation. We increased our salaries; we introduced a stock option plan so that our people would have much more money than any other Indian MNC. We also decided to make it a fun place to work because our assets walk out of the door every evening mentally and physically tired. We must make sure that they come back with a zest to work.

I am a firm believer that this country has a lot to learn from the West. We have to be open-minded, learn all the good things from them, and become stronger. For me a democracy is one where people put public good before private good; where responsibilities come before the rights.

What has kept the Infosys team together through all these years?

N.R NARAYANA MURTHY: How do we stay together? We have unwritten rules. Everybody knows that if we want to work as a team we have to be transaction based. We start every transaction on a zero base. It is perfectly feasible for us to disagree on a transaction but we start the next transaction without any bias. Only an argument that has merit wins; it has nothing to do with hierarchy. Disagreeing is in the nature of things. When you bring a set of

people who have respect for each others’ competence in certain areas and you’re transactionoriented then it can work as it has in our case. Our value system was like the British Constitution – it was all unwritten but extremely well practiced. If I were to have another opportunity to found another company, I would never ask for anyone else – these are truly remarkable people. Our value system is the true strength of Infosys. Besides, we have complementary skills. For example, I have an eye for detail and am comfortable with balance sheets and numbers. Then I can also get into the big picture. Nandan has a great ability to communicate and get himself connected to networks; his thinking is very strategic. Raghavan is a good people manager. Gopal is the best among us in technology. Shibulal and Dinesh are great on projects – so there’s a complementarity of skills

What do you think was your best business decision?

N.R NARAYANA MURTHY: Well, I think the best business decision was to introspect. We will press on the pedal. We will compete with the best of the multinationals in terms of retaining people, in terms of creating a brand equity. I think if you ask me what distinguishes Infosys from many other companies, it is the following: We have a very strong value system. In fact, when I address new hires the main thing I talk to them about is the value system. I tell them that even in the most fierce competitive situation they must never talk ill of customers. For heaven’s sake don’t short change anybody. Never ever violate any law of the land. It is better to lose a billion dollars than a good night’s sleep. It is a true meritocracy. Raghavan’s two children are engineers but they did not come here to ask for a job. They worked elsewhere before they went to the US to do their mba. It is our responsibility to maintain the dignity of professionals here. The second thing that’s unique about Infosys is that we have accepted that speed and imagination are the only two context-invariant and time-invariant parameters for success. We don’t think that we have any extraordinary legacy/strength that will carry us through the years. If we continue to innovate and to adapt then we will survive or else we’ll disappear like dew on a summer morning. So there’s a sense of paranoia and a certain fear that tomorrow we may not get food on the table if we don’t satisfy our customers. We don’t think

anything is given to us. We’re as good as our last quarterly result. If we don’t do well in the next quarter, we’ll be wiped out.

So far Infosys has grown organically. Are you looking at acquisitions as a future growth strategy?

N.R NARAYANA MURTHY: Indeed. Adding 50% to $500 million is so much more difficult than adding 50% to $100 million. We are looking at acquisitions though we haven’t identified any company yet. We want to look at a group/company that will add to the top line immediately but will also add to the bottomline in the medium term. Ideally it should be a small company, so that the cross-cultural issues can be handled more easily. Third, it must have an intellectual property right, either in the form of a methodology or a tool or processes which can be scaled up across Infosys for improving productivity in an emerging area like ecommerce, crm etc. Finally, it could also be an aged technology product which has fallen on bad days but one that has a captive customer base. We can take that and enhance it technologically because we have the strength here to do that. And because there’s a captive customer base it’s much easier to sell. In any product, selling to the first 20 customers is the hardest.

Many feel that software companies are riding the boom in demand for y2k remedial work. What will be Infosys’ life after y2k?

N.R NARAYANA MURTHY: We will continue be a software services company because as technology changes rapidly, companies will want to leverage the internet for gaining competitive advantage. There will be tremendous opportunities for companies like Infosys to re-engineer existing systems, enhance functionality. But the fundamental strength will have to be learnability of experience. That is, how quickly you understand a new paradigm, a new technology and apply it to bring business benefit to customers. As long as learnability is alive and kicking at Infosys, we will have no problems about our future.


What are the big challenges facing you?

N.R NARAYANA MURTHY: We have to put in systems, processes and tools to leverage technology to enhance the quality and productivity of our people. If today we take 100 hours to do something, then next year we should take 95 hours. Second, we must learn to manage growth. Inspite of recruiting larger numbers we should operate as a small, close knit, nimble company. That’s the task of this management.

N.R NARAYANA MURTHY: My vision is to make Infosys a globally respected software corporation, delivering best of breed solutions employing best in class professionals. That’s different from an mnc which generally has subsidiaries in different countries, manufactures and sells there. As a corollary to that, I want it to be a place where people of different nationalities, religions and races will come together and compete in an environment of harmony and meritocracy. We believe that the local people are the best people in a given environment.

What are the challenges that the software sector faces in the new millennium?



N.R NARAYANA MURTHY: One, we have to create corporate brand equity and product/services brand equity outside India. Indian industry’s record of doing this has been pathetic. We have to become multicultural as local people are most effective in a local environment. And we have to learn to operate in a multicultural environment. We have few examples of Indian companies successfully doing so.

The most difficult challenge is recruiting, enabling, empowering and retaining the best and brightest talent. Enhancing per capita revenue productivity and moving up the value chain is the next big challenge because our costs are going up in India. Unless we do this, our success won’t survive in the long run.

Will Infosys move up the value chain to become a pro-duct company in the future?

N.R NARAYANA MURTHY: Our profitability and margins are the best in the services industry. Compare us with anybody on Nasdaq. The net income margin of Infosys is as good as any product company with the exception of Microsoft. It’s not necessary to transform ourselves into a product company. In fact, in the Net economy it is services companies like Amazon.com, Priceline, eBay that have been growing. I’m not worried about traditional thinking that one must have a product. Infosys has enhanced its per capita productivity at least 10% in last five years. We are positioned to continue to be profitable.

Does government have a role to play in the it sector? One view is that it has grown because the government has been hands-off and now that an it ministry has been set up it could pose a roadblock. What is your view?


N.R NARAYANA MURTHY: The government has a role in creating a context for Indian entrepreneurs to succeed. They should concentrate on a policy regime and not a case-by-case syndrome. If decisions of corporations are not taken in boardrooms but in some government office then we won’t go anywhere. Our company has been at the leading edge in pushing the policy regime. When we got listed on Nasdaq we required a policy regime. We need the cooperation of government as we move forward.

What opportunity does the growing power of the Internet pose for your company?

N.R NARAYANA MURTHY: Internet is a great phenomenon particularly for a country like India because it has meant the death of distance. It has brought the anywhere, anytime paradigm. In a large resource scarce country like India, it is going to play a crucial role in ensuring that both business to business and business to customer benefits accrue much faster to both industry and consumers.

N.R NARAYANA MURTHY: Thanks to the emergence of companies like Amazon, the traditional companies have realised that they have to shape up or ship out. So there’s a tremendous emphasis on leveraging the power of the internet. We understand online transaction processing very well – we have done it for 18 years. E-commerce requires the ability to mount a robust and secure an online transaction processing engine, a certain application layer. The only difference is that you have to create a user-friendly web front end which skill we’ve developed in the last 2-3 years. We have a big advantage of over new ecommerce companies because the design and implementation of a high performance engine is something we’ve been doing for years. US corporations are in a hurry to get on to the ecomerce bandwagon and this is a clear opportunity for us.

The stockmarket seems to have discovered the worth of it and infotech stocks are seeing ever rising valuations. How do you react to this?


N.R NARAYANA MURTHY: I tell my colleagues not to look at the stockmarket. What we should worry about day after day is to provide quality products on time, within budget to our customers. We must show transparency to investors, not violate any law of the land, and be in harmony with society. That’s our main charter and we should stick to it. The stockmarket may or may not reward us even if we do that. This is ephemeral. We should not be too ecstatic about it today or get despondent if it falls tomorrow.

People say that the intellectual elite of India is now in Silicon Valley. What is your view?

N.R NARAYANA MURTHY: Twenty years ago if someone had asked me whether Indians should go abroad, I would have said No. Today I have a completely different view. The need of the country today is to create a good brand equity of the country. That will be created by high quality Indians in some numbers establishing themselves abroad. I don’t feel bad about it. If some people go we should cheer them, applaud them, make them feel welcome, and give them emotional support. Because they are doing a great job of enhancing the equity of India. It’s very easy to sit in India and say Mera Bharat Mahaan. Economic power is the only thing that counts in today’s word. We have to create an image in the minds of foreigners that Indians can do it. In fact, that has already happened in the Valley. If an Indian is involved in a venture, then the venture capitalist will look positively at it. We have to convert this country so that we not only retain people here but also attract some of them back.

What advice would you give to the next generation of entrepreneurs?

N.R NARAYANA MURTHY: Early to bed and early to rise and work like hell. Those people who have entrepreneurial strengths need to get a marketable idea and understand the window of opportunity for it. They have to bring together a team that has mutually exclusive, but collectively exhaustive skills and work out a value system. Entrepreneurship is about running a marathon, not a 100 metre dash.


What does money mean to you?

N.R NARAYANA MURTHY: Beyond a certain level of comfort I think one’s wealth should be seen as an opportunity to make a difference to society. My colleagues think so too. The power of money is the power to give. Obviously it will have to be done in a gradual manner over the years, but there’s no doubt that a majority of what we have will be given to public causes.

What drives you then if not money?

N.R NARAYANA MURTHY: There’s a saying in America that the reward for winning a pinball game is to get a chance to play the next one. In most situations, the pleasure comes from the journey, not the destination.


Chapter 3






With one of the highest GDP growth rates in the world and an array of recent achievements in technology, industry and entrepreneurship, India strides confidently towards the future. But, in the world's largest democracy, not everyone is equally fortunate. More than 300 million Indians are still prey to hunger, illiteracy and disease, and 51 per cent of India's children are still undernourished.

What will it take for India to bridge this great divide? When will the fruits of development reach the poorest of the poor, and wipe the tears from the eyes of every man, woman and child, as Mahatma Gandhi had dreamt? And how should this, our greatest challenge ever, be negotiated?

In this extraordinarily inspiring and visionary book, N.R. Narayana Murthy, who pioneered, designed and executed the Global Delivery Model that has become the cornerstone of India's success in information technology services outsourcing, shows us that a society working for the greatest welfare of the greatest number — samasta jananam sukhino bhavantu — must focus on two simple things: values and good leadership. Drawing on the remarkable Infosys story and the lessons learnt from the two decades of post-reform India, Narayana Murthy lays down the ground rules that must be followed if future generations are to inherit a truly progressive nation.

Built on Narayana Murthy's lectures delivered around the world, A Better India : A Better World is a manifesto for the youth, the architects of the future, and a compelling argument for why a better India holds the key to a better world.




Narayana Indians...









He represents the face of the new, resurgent India to the world.' - Manmohan Singh, Prime Minister of India

'Through his vision and leadership Narayana Murthy sparked a wave of innovation and entrepreneurship that changed the way... the world views India.' - Bill Gates, Chairman of the Board, Microsoft Corporation