NIA PGDM 2019-2021

BECG ASSIGNMENT 1
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10. The assignment carries 15 Marks

 CASE STUDY
Infosys Technologies
The Best Among Indian Companies
(This case is based on reports in the print and electronic media. The case is meant
for academic discussion only. The author has no intention to tarnish the
reputations of the corporate or the executives discussed.)
HUMBLE BEGINNING AND SPECTACULAR GROWTH OF INFOSYS
Infosys Technologies is India’s most popular and best managed IT company with
its global headquarters at Bangalore. It was founded in 1981 by Narayana Murthy
and six of his colleagues in Bombay in a single room of Murthy’s house with a
paltry sum of INR 10,000 as capital. It has, today, a global presence of 32 sales
offices in 16 countries, 33 global software development centres and one business
continuity centre. It employed 35,229 people as on 31 December 2004.
VISION AND MESSAGE OF INFOSYS
The vision of Infosys is ‘to be a globally respected corporation that provides best-
of-breed business solutions, leveraging technology, delivered by best-in-class
people’. Its mission is ‘to achieve our objectives in an environment of fairness,
honesty and courtesy towards our clients, employees’ vendors and society at
large’. Infosys has set standards in every business activity—best campus, best
working environment, best employer, most transparent dealings, highest quality
standards—as well as the highest ethical standards, never seeking any deviant
benefits from the government.
The most telling message that Infosys gives out to any discerning observer is its
motto: Powered by Intellect and Driven by Values. These two phrases put
together stand for everything that Infosys is and wants to be. It is a combination
of the business acumen and the deep commitment to ethical values.
Powered by intellect: Infosys plans to take a lead in leveraging the global
delivery model (GDM), pioneered and perfected by it, to help clients derive
maximum strategic advantage. In the next growth phase, Infosys would focus on
customer centricity, meeting shareholder expectations and building a
multicultural work-force—a seamlessly integrated team of talented, global
professionals.
Driven by values: Infosys is an ethical organization whose value system ensures
fairness, honesty, transparency and courtesy to all its constituents and society at
large.
Infosys Technologies strives to be the best company both commercially and
ethically not only in India but also globally. To realize this objective, the company
has developed C-Life Principle of core values that it puts into practice in all
aspects of its business activities.
 Customer delight: A commitment to surpassing customer expectations.
 Leadership by example: A commitment to set standards in the business
and transactions, and be an exemplar for the industry and their own
teams.
 Integrity and transparency: A commitment to be ethical, sincere and
open in their dealings.
 Fairness: A commitment to be objective and trans-action-oriented,
thereby earning trust and respect.
 Pursuit of excellence: A commitment to strive relentlessly, to constantly
improve themselves, their teams, services and products so as to become
the best.
Infosys also has developed a strong management system to guarantee at all
times to all its stakeholders a set of procedures that would serve them. For
example, there was a much-publicized sexual harassment case against one of its
top managers in the USA that was settled out of court. But this unsavoury
situation has led the company to review and improve its staff training to create an
awareness of such problems and to introduce a code of conduct for employees
with a view to guiding them follow a certain work ethics in their places of work.
Even while Infosys is committed to long-term shareholder value, its business
activities are anchored in three pillars of corporate behavior, namely, business
ethics, corporate governance and corporate social responsibility. The Infosys
fraternity recognizes, understands and appreciates these principles. As a result,
Infosys demonstrates an exceptional work ethic.
INDIA’S MOST ADMIRED COMPANY
Infosys Technologies is widely known for its best practices in terms of business
ethics and corporate governance. In 2000, the company was conferred the
National Award for Excellence in Corporate Governance by the Government of
India. The Business World—IMRB Survey ranked Infosys number one among the
most respected companies in India, in 2001. It was voted as India’s best managed
company for 6 years in a row, between 1996 and 2001 by the Asia Money Poll. In
the year 2000, in the survey of Far Eastern Economic Review, Infosys was selected
as one of Asia’s leading corporations and was ranked first as ‘The Company that
Others Try to Emulate’. The company was voted ‘India’s Most Admired Company’
in Economic Times in 2000. In 2003, Infosys Technologies co-founder and
chairman, N.R. Narayana Murthy, won the Ernst & Young World Entrepreneur of
the Year award; judges of the award praised his ‘intellectually, philosophically,
ethically and spiritually-driven entrepreneurship’ and his company’s ‘outstanding
financial performance and global impact in a dynamic and volatile industry’.
Infosys Technologies has won the prestigious ‘Global Most-Admired Knowledge
Enterprises (MAKE)’ Award, for 2004. Infosys won the award for the second time
in a row, and remains the only Indian company to have ever been named a
prestigious global most-admired knowledge enterprise.
Infosys Technologies made a winning sweep in the Business World ‘Most
Respected Companies’ Award’ 2004. The company remained ‘India’s most
respected company’ since 2001; it topped the special categories of ‘most ethical
and most globally competitive’ companies and the ‘Most Respected Company in
the IT Sector’ category, topping all 19 parameters of the survey. The latest
Business Today—AT Kearney study conducted in March 2005 placed Infosys
Technologies as ‘India’s Best Managed Company.’ Such encomiums have been
pouring in for Infosys, year after year.
Infosys Technologies featured among the world’s most respected companies,
having climbed in the ‘respect’ ranking from last year. It was also recognized in a
number of other categories including corporate governance, creation of
shareholder value, corporate social responsibility and innovation.
A PEOPLE-CENTRIC COMPANY
Infosys excels in people management. While its employee strength has
skyrocketed to over 35,000 from around 5000 at the turn of the century, the
intense focus on people and their skills has only increased over the years. Infosys
focus on people is a natural corollary of its growing business, with customers
identifying this as a quality that often distinguishes it from other competitors in
the IT services sector. As Infosys seeks to transform itself into a global enterprise,
it has learnt that its employees have to be the best, not just in India, but in the
globe. While its selection is already stringent (in 2003–04, it recruited 10,000
people from over a million applicants), training will help keep its nose ahead of
the increasing competition.
BUSINESS DESCRIPTION
The company’s services include business consulting, custom software
development, maintenance and re-engineering services, systems integration, IT
infrastructure management and business process outsourcing. Infosys is today the
second largest publicly traded software services exporter providing specialist IT
services to around 350 corporations such as GE, Airbus, Cisco and Nortel,
predominantly in the US. It was the first Indian company to be listed on the
NASDAQ exchange in 1999, when their stock value soared.
FINANCIALS OF INFOSYS—NEXT $1-B REVENUE SEEN IN 18 MONTHS
Infosys’ net profits rose by 53 per cent to INR 513 crore, while revenue grew by 47
per cent to INR 1,987.32 crore for the quarter-ended 31 March 2005, over
corresponding last year. Sequentially, the growth in net profits and revenues was
at 3.25 per cent and 5.96 per cent, respectively. On-site volumes grew by 4.6 per
cent while offshore volumes rose by 6.6 per cent during the March quarter, as
compared to double digit-volume growth the company used to post in the last
few quarters. The lower growth during the year was attributed to the high cost
incurred by the company in complying with the tenets on corporate governance
prescribed by The Sarbanes—Oxley Act, the Anti-Money Laundering Act and the
Patriots Act in the US wherefrom most of Infosys business comes.
 The company has forecast a substantial revenue growth in the current fiscal
(2005–06) enabling it to cross the $2 billion mark by March 2006.
While it took 23 years for Infosys to go past the $1 billion revenue mark, it may
take less than 18 months for it to cross the next billion. The scorching pace at
which Infosys is growing gives an indication of the company getting several of its
initiatives right. ‘We are beginning to see the results of various initiatives taken
over the last few years,’ Nandan Nilekani, the CEO and Managing Director of the
company, observed in April 2005. He said the company’s clients increasingly see it
as a strategic long-term partner which can offer a wide range of services and
contribute to their business goals. The company also hopes to reap large benefits
from its current investments. Infosys is expected to invest
INR 950–1100 crore mainly in technology infrastructure expansion of seat
capacity and China Operations.
BUSINESS STRATEGY OF INFOSYS
As Infosys scorches its way ahead with around 50 per cent growth rates, there are
a handful of hurdles it will have to clear to stay on course. The most obvious one
is the strong appreciation of the rupee, but there are other, far more significant
challenges, such as the shrinking pool of skilled manpower and the creation of a
complete solutions provider with global reach and scale; yet another challenge is
the increasing cost of adherence to global best practices that would tell upon
profit margins in an extremely competitive environment as has been
demonstrated in 2004–05 financials of many software services companies. Their
profit margins were highly reduced consequent on their complying with Sarbanes
—Oxley Act on corporate governance, the Anti-Money Laundering Act and the
Patriots Act in the US.
Like its peers in the upper reaches of India’s IT service industry, Infosys faces
the challenges of, all at once, inducting and orienting a large number of
employees, ensuring that the Infosys way, a process-driven way of working, does
not change, and distilling knowledge from all the projects it has completed or
from the work in progress. The company, which currently has around 36,000
employees on its rolls, has addressed these challenges through what it terms
‘Pride’ (Process Repository @ Infosys for Driving Excellence), an online resource
that segues into the company’s fancied knowledge management system termed
Kshop (Knowledge Shop) at one end, and the actual development environment at
another. As a result of this, ‘Infosys will reap the benefit of an army of employees
that works the same way, gains in process efficiency and productivity, and higher
quality’.
RAPID WEALTH AND VALUE CREATION THROUGH DIVERSIFIED BUSINESS
Building a $1-billion company has not been achieved by just being good to
employees. While it was initially just a plain IT services company, Infosys has
stepped up its offerings over the past few years at both ends of the spectrum and
is increasingly managing to string its various pieces together. Thus, Infosys
Consulting, which the company started off in April 2004 with a $20-million
investment, will become a 500-employee unit by 2007 and Progeon, its business
process management subsidiary, already boasts of over 3,400 employees.
The company’s extended capabilities are reflected in growing engagements
with customers across industries. In many cases, Infosys began with conventional
IT maintenance work in 2000, but rapidly stepped up its partnership to
encompass many other areas such as business process consulting, software
process consulting, application development and support, enterprise architecture
services, and technical training as in the case of Hannaford Brothers, a European
retailer. The creation of a US-based consulting company is a major step forward in
Infosys’ long-term strategy of presenting itself as a global service provider.
Infosys’ $20-million investment in this subsidiary is designed to send a clear signal
to the marketplace that it is being totally different from its Indian competitors,
and intends to compete for business consulting services with the traditional
consultancies.
Infosys relies on its much-touted Global Delivery Model (GDM), which is based
on much more than cheap manpower, to push its case as a preferred vendor. Yet,
it is apparent that the competition, especially companies like IBM, having recently
discovered GDM are pushing ahead with their new-found wisdom. The key to
GDM is the focus on getting the best talent, wherever it is located, and using that
to address the customer’s needs.
 One of Infosys’ key strengths has been its ability to add new business offering
and mould itself to suit changing market requirements. It has added services such
as independent software testing and enterprise applications to its offerings. It has
also reorganized itself along verticals or industrial compared to the geography-
specific orientation it conformed to earlier. And most of the company’s growth
has been organic, barring the odd buy like its acquisition of Expert Information
Systems, which it morphed into Infosys Australia.
Infosys is also looking to diversify its risk and explore emerging markets for its
range of services. The American market may offer the largest and deeper IT
market to companies; yet, the potential in other countries cannot be ignored. The
contribution from the US has in fact dipped to just over 65 per cent for the third
quarter ended 31 December 2004, compared to over 73 per cent in the
corresponding period in the previous fiscal.
INFOSYS’ KEY TO SUCCESS
Infosys survived the global downturn in IT spending during the years of recession
between 2001 and 2004, managing to actually grow by focusing on providing
services to companies that desired to update their existing systems, undertaking
more work for current clients, launching an aggressive marketing campaign
overseas, adding new clients and cutting costs wherever possible.
Infosys’ attributes its success to investing heavily in its employees leading the
market by focusing on cutting edge technology, and applying strict ethical
business practices. Infosys’ success in the highly competitive IT industry lies in:
 Giving employees a world-class environment to work and learn.
 Giving employees a high quality of life and wealth creation opportunities.
 Looking at potential employees’ ability to learn and assimilate technical
knowledge and skills.
 Replacing obsolete technology regularly to remain at the cutting edge.
 Emphasizing constantly on quality by benchmarking against the best
processes in the world.
 Diversifying income sources to minimize risk of revenue, i.e. setting limit
to contributions from one client, one technology, one industry.
  Complying with accounting standards of advanced countries and ensuring
strictest adherence to corporate governance.
BUSINESS ETHICS AT INFOSYS
Infosys Technologies has unveiled a code of ethics for its finance professionals
and a whistleblower’s policy to encourage and protect employees willing to share
information on frauds, but who choose to remain anonymous. Though the Indian
law has not imposed it on companies as yet, the Infosys chose to apply this code
because it believes it should raise the bar for compliance.
The code of ethics for its finance professionals’ states, ‘We consider honest
conduct to be conduct that is free from fraud or deception and marked with
integrity. We consider ethical conduct to be conduct conforming to accepted
professional standards of conduct. Ethical conduct includes the ethical handling of
actual or apparent conflicts of interest between personal and professional
relationships. By expecting the highest standards of honesty and ethical conduct,
we expect our officers to stay far from the line differentiating honesty from
dishonesty and ethical conduct from unethical conduct’.
The Code of Business Conduct and Ethics helps the company ensure compliance
with legal requirements and the company’s standards of business conduct. The
code deals with aspects of employees’ responsibilities to the company and its
stockholders, which includes General Standards of Conduct (covering workplace
free of harassment, drug and alcohol abuse, safety in workplace, dress code and
other personal standards, expense claims and applicable laws.
The Whistleblower’s policy encourages employees to report questionable
accounting matters, any reporting of fraudulent financial information to
shareholders, the government or the financial markets or any conduct that results
in a violation of law by Infosys to the management even if it is on an anonymous
basis. It sets out norms for receiving, retaining and treating complaints and
procedures for confidential, anonymous submission by employees of complaints
with regard to accounting frauds leading to results in a violation of laws or
mismanagement of company resources.
In terms of ethical behavior, Infosys has an unwavering commitment to best
global practices and has been driven by its vision to became a global player. It was
one of the first Indian public companies to adopt voluntarily the stringent US
GAAP long time back while many other organizations are only toying with the idea
of implementing it in their companies. To quote Nandan M. Nilekani, Infosys’ CEO
and Managing Director: ‘Infosys as a company has always believed in
commitment to values, ethical conduct of business and making a clear distinction
between personal and corporate funds. When we founded the company, we took
a decision that we keep this line very clear.’
The culture of ethical behavior in the organization emanates from the top and
percolates down to the managerial and employees’ level, for the foundations of
such systems are made to rest on ethical value system. The founders of the
company took only salaries and dividends and had no other benefits from the
company unlike founders of other companies. In following these principles of
observation and preservation of ethical standards in his company, N.R. Narayana
Murthy ‘has known the way, shown the way, and gone the way’. In order to
create an ethical working environment, the initiative must be supported by, or
better still, come from, the top management and leaders in the organization. The
steps in doing the same include the following:
 Making the decision to commit to ethics.
 Recognizing that they are the role models by definition, by action, and by
values.
 Assuming responsibility for instilling ethical behavior.
 Articulating their values.
 Train the staff.
 Encouraging open communication.
 Being consistent in their approach.
It is only by doing all of the above on a continuous basis, that they can ensure
the permeation of their ideals throughout the organizational layers, and deep-
rooted understanding and following of these ideals by employees. Narayana
Murthy and the other leaders at Infosys have taken this to heart and make it a
point to express the company’s ideals at every opportunity, to fellow-Infoscians as
well as to the society in general. Explains Nilekani, ‘When a company has a strong
value system, focusses on honesty, transparency and fairness to all stakeholders,
the key thing is we have to set the example and be a role model in the way we
conduct ourselves. We cannot have a system where we preach corporate
governance but, in our actions, we don’t demonstrate it. Then people will not
believe us. I think once we practice that in every aspect of activity, then
automatically people get ingrained in that’.
THE PHANEESH MURTHY CASE
For a company so revered by the entire Indian and foreign business community
for having set the highest ethical standards, it seemed to be only a matter of time
before someone tried to pull it down. But to their credit, the company honourably
resolved the issue and came back much stronger and surer of its values than ever
before. Infosys became entangled in a scandal, between October 1999 and
December 2000, that dented its reputation as a company that had the best
corporate governance structure in the country. The Hindu Business Line reported
on 7 August 2002, ‘Since its inception, this is probably the first piece of negative
news about Infosys’.
In December 2001, former Infosys employee Reka Maximovitch filed a
complaint in the Alameda Superior County Court, Oakland, US, alleging verbal
sexual harassment, unwanted sexual advancements and unlawful termination of
employment against Phaneesh Murthy, the highest paid employee of Infosys. It
created ripples in business circles and in the eyes of the public when he abruptly
resigned from Infosys in June 2002 to ‘devote time and attention to pursue a
successful defence of the suit’.
Initially, Phaneesh Murthy refused to participate in the settlement initiated by
Infosys on the terms specified by it. However, later on, he voluntarily signed the
settlement and agreed to every condition that Infosys had set. As the company
retained its right to sue Phaneesh for his actions and lack of contributions, it went
ahead with the settlement without any contribution from Phaneesh.
The stand taken by Infosys in this case seemed to go against its image of a
company considered to be a model of good corporate governance. Media reports
blamed Infosys for having kept the issue under wraps for a long time neglecting to
put in place a structured policy concerning sexual harassment, and for
compromising on moral values. The company’s share price declined by 6.6 per
cent soon after Phaneesh left. This news and the issue of sexual harassment at
the workplace were debated heatedly in corporate and media circles, in India as
well as abroad, as many more shocking events unfolded over the next 1 year.
Infosys Technologies maintained a studied silence on the episode on the ground
that the matter was subjudice. On 11 May 2003, Infosys finally announced the
amicable settlement with Maximovitch by agreeing to pay $3 million as
compensation. The company contributed US$ 1.5 million and the balance US$ 1.5
million was contributed by the insurers under the company’s Directors and
Officers Liability Insurance Cover. Infosys refused to give more details about the
manner in which the settlement was arrived at, and whether Infosys conducted
any internal enquiry before Phaneesh Murthy submitted his resignation.
A crisis brings out the best and worst in any organization or in any person. It is
also true that a crisis provides a learning opportunity for them. Infosys also learnt
its lesson and put in place principles of work ethics to be followed by its
employees and a whistle blower policy. Infosys chairman and chief mentor, N.R.
Narayana Murthy said later, ‘The litigation with the plaintiff is behind us. We have
taken further steps to strengthen our internal processes and improve the checks
and balances to handle similar situations’.
CORPORATE GOVERNANCE AT INFOSYS
Infosys, beginning as a modest software consultancy firm in 1981, has become
over the years, a large public company that conforms to internationally
benchmarked standards of corporate governance. Admiration for Infosys both
from within and outside the business community comes from its strong focus on
corporate governance. It has been rated highly in several corporate governance
reports, including one by rating agency CLSA, which has given it a high CG Star
grade.
Infosys has set new and effective standards in communicating with
shareholders, stock exchanges, and general public at large. Its annual report is
said to be a trendsetter with respect to the disclosure norms evidenced by the
sheer length and detail of the report. Its annual report has been commended as
an ideal report by the Securities and Exchange Commission of US to be emulated
American Companies. Infosys has demonstrated through its practices and
procedures its commitment to enhance investor-relations and has amply
rewarded its shareholders through its impressive performance by increasing
shareholder value. In fact, the company pursues a value-based management
methodology wherein it measures the company’s performance on the basis of
various tools and techniques such as brand value, economic value added,
intangible asset scorecard, balance sheet including intangible assets, current-cost-
adjusted financial statements and human resources accounting and value-added
statements. It continuously strives to improve itself on all these parameters.
Infosys has started implementing best international governance practices even
while the concept was getting crystalized, after the recommendations of the
Cadbury Committee and the Confederation of Indian Industry’s Code. The Kumar
Mangalam Committee Report on Corporate Governance (1999) summarized the
overall objective of the concept thus: ‘The fundamental objective of corporate
governance is the enhancement of long-term shareholder value while, at the
same time, protecting the interests of other stakeholders.’ Infosys has adopted
these ideals as an article of faith, and observes it to the minutest details. While
Infosys has complied with most of the recommendations made by the CII and
those of the Kumar Managlam Birla Committee on Corporate Governance, it was
also the pioneer in benchmarking its policies with the best in the world. If best
corporate governance practices are to be implemented in an organization, it has
to be done in a manner so as to ensure (i) an independent and proactive board;
(ii) independent committees to decide executive compensation and for
nomination and audit purposes; and (iii) an independent audit system. Infosys has
put in place all these governance practices and has seen to their yielding the
fruitful results for the overall welfare of all stakeholders.
One of the prerequisites of an independent Board is to have a clear
demarcation of responsibilities and authority between the chairman of the board
and the senior officers of the management such as the chief executive officer,
managing director, president and the chief operating officer. Infosys has achieved
this separation between the board and management long back. The CEO is
responsible for corporate strategy, brand equity, planning, external contacts,
acquisitions by and board matters. The COO is responsible for all day-to-day
operational issues and achievement of the annual targets in client satisfaction,
sales, profits, quality, productivity, employee empowerment and employee
retention. The CEO, COO, executive directors and the other senior management
personnel make periodic presentations to the board on their targets,
responsibilities and performance.
Another important criterion suggested by various committees to ensure best
global practices in Indian companies is to have an appropriate mix of executive
and non-executive directors to maintain the independence of the board. To
separate the board functions of governance and the management, Infosys has
eight executive directors and eight non-executive directors, out of the 16
directors on its board. While the executive directors bring to the board their
expertise and experience in managing the day-to-day affairs of the company and
the problems and issues involved in decision making, the non-executive directors
bring in international professionalism to corporate boards. The board members
are known to possess expertise in skills, technology, finance, human resources
and business strategy, all of which are essential to manage and guide a high
profile, high growth, high tech, global software company. The directors at Infosys
belong to the productive age group between 40 and 55 years of age so as to serve
the board actively. They are not related to any senior manager or board members
so as to be bereft of any influence. The board members are expected to attend
and participate in all board meetings and also in the meetings of the committees
to which they belong. While the executive directors are not allowed to serve on
the board of any other company—unless it is an industry association or
government body relevant to the software industry or one whose objective is
promotion of social welfare—non-executive directors are not expected to serve
on boards of competitor companies. Board meetings are regularly held with clear-
cut agenda. Apart from routine meetings, the board also meets once in every
three months to review the quarterly results and other issues.
An effective corporate board is one that delegates the resolution of important
issues to specialized committees. Infosys has three committees—the Audit
Committee, the Nomination Committee and the Compensation Committee. As
suggested by various committees on corporate governance and to ensure
independence of the board, the members of these committees are all non-
executive directors. The degree of independence vested in these three
committees ensures that vital areas such as compensation, audit and nominations
are carried out in a just and equitable manner without being influenced by
management. According to Nilekani, Infosys’ experience with these committees
has been quite beneficial. ‘These committees have been extremely effective,
especially the audit committee. We have used it very effectively to audit the
entire business practices of the company. We have internal auditors, external
auditors. We present all the issues before the audit committee. The whole
process has been very effective.’
An ideal way to ensure better corporate governance is to assess the efficacy of
the board of directors through an effective appraisal system. However, this ideal
is rarely followed even in developed countries, and universally board
performance is hardly monitored or evaluated. Infosys, to some extent, has put in
place structures to ensure evaluation of performance of the Board. Says Nilekani:
‘All the working board members have performance indicators. At the beginning of
every year when we present budgets to the board, we also present our individual
performance indicators. What jobs we do? What are the goals for the year? We
are measured on that. The compensation committee decides our benefits based
on the performance.’ It is a self-evaluation process, and external directors also
measure the performance of the internal board.
Effective and efficient risk management is one aspect of corporate governance
that helps a company achieve its goal of maximizing shareholder wealth. In
today’s competitive environment, companies have to, apart from employing
shareholders’ money productively, ensure that they do not expose their
businesses to unwarranted risks. Infosys has put in place a risk management
system that tracks every conceivable form of risk, arising out of client, geographic
or technologies concentrations. The company’s diversified business strategy,
especially in terms of risk avoidance, has been effective and has ensured that
there is no undue dependence either on a single client, territory or technology.
CORPORATE SOCIAL RESPONSIBILITY
If wealth creation for the benefit of shareholders is an objective of corporate
governance, social concern to protect the interests of all stakeholders and the
society at large are also to be given due prominence. Infosys balances wealth and
welfare strategically. Infosys has used its wealth and stands to contribute to
improvements in the community. A core value of Infosys is a strong sense of social
responsibility and commitment to help people and community. It is actively
involved in various community development programs.
Infosys established the Infosys Foundation, a trust founded to further the
company’s commitment to social causes, to aid destitutes and the disadvantaged
people. One per cent of Infosys’ profit after tax is donated to the Foundation
every year. The Foundation focusses on enhancing the living conditions of the
rural population, healthcare for the poor, education, and promotion of Indian arts
and culture. Last year (2003–04), Infosys initiated three social programs to
improve computer literacy of rural people as well as the teachers in rural areas.
Along with Microsoft, Infosys launched a program, computers @ classrooms, as
part of which old computers were given away to educational institutions.
THE INFOSYS FOUNDATION
‘It is better to light a candle than remain in darkness.’ The Infosys Foundation
starts with this humble, but thought-provoking philosophy. The foundation came
into being with the objective of supporting the underprivileged in society. It
began its activities in Karnataka in 1996. Today, the activities have been extended
to Tamil Nadu, Andhra Pradesh, Maharashtra, Orissa and Punjab. The Foundation
primarily aims at improving the health, education and basic facilities, benefiting a
large number of individuals and institutions.
In a short span of time, the Foundation has successfully implemented projects
in the the following areas:
 Health care: It has constructed many hospitals, wards in hospitals,
donated costly equipment, distributed medicines for free and introduced
various schemes to benefit those in need.
 Social rehabilitation and rural upliftment: The foundation has
constructed orphanages, girls’ hostels and shelters, and undertaken
various initiatives to aid the lesser privileged.
 Learning and education: The Foundation has undertaken ‘A Library for
Every School’, one of the largest rural education programs in the country.
It provides financial support to promising students from economically
 weaker sections. It has constructed science centres and labs in rural
schools, and in some cases, entire schools for the benefit of rural
children.
 Arts and culture: The Foundation has coordinated a project to donate
cassettes among rural schools in Karnataka to bring back life into the
dying arts, puppet shows to enliven the theatre art, and encourages
artistes to perform and also benefit financially.
Infosys Technologies contributed INR 5 crore to the Prime Minister’s National
Relief Fund to assist the victims of the giant Tsunami that ravaged south and
southeast Asia in the last week of December 2004. The company also actively
supported its employees’ efforts across group companies globally, to make
monetary and material contributions towards aid operations.
Infosys also instituted in 1999 the Infosys Fellowship Program to foster
excellence in education and offered funds at the Five IITs and three IIMs for Ph.D.
programs in computer science, management, law and accounting. Under this
program, the company grants INR 9 lakh per fellowship for the entire duration of
Ph.D. program.
NARAYANA MURTHY LOGS OUT OF INFOSYS
After more than 30 years of association with Infosys, which he helped to set up
with some of his friends, its chief mentor and chairman N.R. Narayana Murthy
decided to step down as its chairman on 20 August 2011. Having been the most
visible face of India’s second-largest information technology company, Narayana
Murthy would be now its Chairman Emeritus. While leaving his full-time tenure of
the company’s CEO, he sought to inspire the new leadership team and employees
to take the company to greater heights. Murthy outlived his vision for the $6
billion Infosys to aspire to become a $60 billion firm in the near future. Murthy
also sold a portion of his shares to start a venture capital firm, Catamaran
Investments, with the objective of investing in fresh ideas, promoting the next
generation of business leaders.
CONCLUSION
The founder and chief architect of Infosys, Narayana Murthy, is a visionary who
exhibits a leading model of innovation and excellence in an industry that is rapidly
evolving. He is capitalizing on growing opportunities in a world that is increasing
its reliance on ecommerce and technology to form a vital part of business
infrastructure. Narayana Murthy’s vision is to harness technology and the free
market to create jobs, and in the alleviation of poverty. Infosys has created
thousands of skilled, well-paid jobs and further opportunity for Indians to develop
their expertise and skills. Infosys demonstrates that it is possible to create success
and build prosperity among the poverty prevalent in India. Infosys Technologies is
a company that the entire world looks up to, in terms of sticking to one’s sound
ethical judgment and doing business the ‘Right Way’. It continues to set standards
in everything that it does, and the people who make the company never think
twice when they have to make a tough decision involving ethics. To them,
‘Dharma’ is above all.
DISCUSSION QUESTIONS
1. Trace the history and the spectacular growth of Infosys as one of the best
managed IT companies in India, and even of the world at large.
2. Discuss the vision and message of Infosys that have paved the way to its
becoming the darling among IT companies in India.
3. Discuss the factors that have made Infosys as the most admired IT
company in India.
4. What are the challenges Infosys faces to maintain its primary status
amongst the IT companies in India? How has the management of the
company worked out a business strategy to achieve that goal?
5. Discuss the role of business ethics in achieving corporate governance at
Infosys. Has the Phaneesh Murthy case sullied the reputation of the
company? Make a critical assessment of the impact of the scandal on the
growth story of Infosys.