Aparita

The Toronto Star

Sharing wealth creates wealth, says Narayana Murthy. Top tech tycoon also respected as social visionary.

Special to the Star

New Delhi — He’s one of the wealthiest and most respected men in India.

He’s also part new-age philosopher and social visionary.

It’s easy to see what makes NR Narayana Murthy, chairman of the board and chief mentor of India’s top software services company Infosys Technologies Limited, a corporate superstar.

On a bright weekend morning, when most of the city was rubbing off the night’s deep slumber from its eyes, Murthy was already on his feet.

He had already conducted one interview with a news channel and was ready to launch into another. He was to end the day with a talk on corporate governance at Delhi’s waterhole for the intelligentsia, the India International Centre.

With revenues posted at $545 million in 2002, and more than 300 clients around the globe including Canadian companies such as Nortel and Fairfax, Infosys is certainly among India’s premier corporations.

So, who better to talk on corporate governance than Murthy, who once remarked that the compensation for top executives shouldn’t exceed more than 15 times the lowest wage earned by an employee of a company?

Maybe old habits do die hard.

A self-confessed capitalist, Murthy was once a staunch socialist. Murthy’s leftist leanings were probably more a sign of the times, the 1970s when a left-of-centre outlook dominated the Indian psyche.

“Yes, that’s true,” Murthy laughs, sitting in the spartan living room of the Infosys guest house in New Delhi, while his “colleague” Manoj, who would normally be referred to as domestic help in Indian parlance, offers water.

“I think it was Shaw who said, ‘If you’re not an idealist in your twenties, you have no heart. If you’re an idealist in your 40’s, you are a fool.’ All of us want to do radical stuff in our youth, but the youth in us takes precedence over logic.”

After receiving his master’s degree from the Indian Institute of Technology (IIT), India’s premier engineering college comparable to MIT, Murthy worked in the tech industry for 14 years, including a stint in France, before starting up Infosys in 1981 with the $250 he borrowed from his engineer wife Sudha.

“By the time I met Sudha, I figured the only way to solve the problem of poverty is by creating wealth. After working in France, talking to a lot of socialist people, reading a lot, I sort of got over my hang-ups of leftism. Still, that doesn’t go away quickly.”

To that end the Infosys Foundation was opened in 1997. In five years the foundation has built orphanages, homes for destitute, rehabilitation centres for prostitutes, and libraries in 7,000 odd schools.

“There is no doubt about the social obligation of a corporation, especially in a country like India where the gap between the have and have nots is so large,” says Murthy.

“One, it’s not nice. And second, more important, I don’t think a corporation can succeed unless it addresses its social context.”

But Murthy’s decision to take “a more hands-off approach to the company’s daily operations” is just sound business sense.

In a country where dynasties rule the roost of business, just as they do in politics or Bollywood, Murthy relinquished the job of CEO of Infosys in early 2002 to take on the role of chief mentor.
“Infosys’ success depends on how smart the next generation of its leaders will be,” says Murthy, elaborating on his new duties.

“Younger people should be allowed to add value to the company because at the end of the day it is leadership that builds confidence in your employees and makes them achieve miracles. Mentoring is one instrument for building that leadership.”

Indeed, some have compared the 56-year-old founder of Infosys, which made history of sorts in 1999 by becoming the first Indian company to be listed on Nasdaq, to another pioneer in the tech world - Bill Gates.

Perhaps there are some similarities.

An engineer by training, Murthy has none of the bombast commonly associated with the rich and famous. His unassuming manner has won him accolades among friends and competitors alike.
His company is something of a South Asian business legend, given there are several hundred jeans-clad and kurta (an Indian tunic) wearing Infosys dollar-millionaires roaming the pristine Infosys “campus,” as the company’s corporate headquarters replete with a canteen, gymnasium and other such amenities in the southern Indian city Bangalore is monikered.

Murthy’s social ethos translates beyond his own company - Infosys was the first Indian company to offer its employees stock options. The diffident mogul of India’s new economy, the IT and ITes (IT enabled services) sector, is also a very vocal social visionary.

His vision includes the role of the Indian IT and ITes sector, one of India’s biggest export sectors, in helping India achieve an 8 per cent growth rate for the next 20 years.

“It can be done,” says Murthy, who also sits on the Indian prime minister’s council on trade and industry. “We need to create about 60 million jobs in the next seven to eight years. To do that we have to do better in manufacturing, in agriculture, in finances, in software, etc. To that extent, I think there is an important need to create anywhere from four to six million jobs just from the IT and allied services.

“Also the contribution of exports to the Indian GDP needs to rise from the current 11 per cent to about 25 per cent, as is the case in China or Brazil today.

“Then we will have much less risk in the economy, we’ll be able to create more jobs and our foreign currency reserves will become stronger. It will be good for the country.”

By diversifying its software services and markets, Murthy seems to be taking an initiative to the same end. He calls it’s a risk mitigation strategy that allowed Infosys, and much of the Indian IT sector, to ride out the dot-com boom and bust.

“During the technology orgy the Indian software industry grew by about 65 per cent,” Murthy explains.

“The Indian IT sector suffered much less during the 2001 downturn in the U.S. and other economies, because the focus over the world has been to get better value for money. Also, Infosys broadened the scope of our services into consulting, systems integration and business process outsourcing. We also opened offices in Australia and are looking at the South American and (South East Asian) markets.”
But it’s probably his simple approach to running a business that’s made Infosys one of India’s most desirable firms to work for or buy stocks in.

With ‘Murthy-isms’ such as ‘The softest pillow is a clear conscience,’ and ‘When in doubt, disclose,’ the company policy is plain.

“Corporate governance is nothing new, in my point of view,” says Murthy. “In fact, we are probably the only company in the world that makes its balance sheets and income statements according to the acceptable accountancies of eight countries, because we have invested in these countries.

“As far as CEO compensation is concerned, I would only say it has to be determined in fairness to the employees, investors and stakeholders and that there has to be the highest level of accountability. “There should be complete disclosure of what the CEO gets and it has to be approved by the shareholders.”

The Toronto Star, [12/08/2002]

Special to the Star

New Delhi — Electioneering slogans at rallies are getting bolder. Bickering over internal party politics is growing louder. Speculation is running rampant.

Legislative-assembly elections will finally be held Thursday in the riot-ravaged west Indian state of Gujarat, with results expected to be announced next Sunday.

India’s election commission finally gave the go-ahead on Oct. 28. Earlier, it ruled that the situation in Gujarat wasn’t conducive to free and fair elections in the wake of communal riots that left more than 700 people dead. Thousands were left homeless in the riots, which were sparked on Feb. 27 when a Muslim mob torched a train carrying Hindu pilgrims as it left Godhra station.

The election commission’s decision to proceed triggered a flurry of campaign activity and controversy.
The two main contenders - the Hindu nationalist Bharatiya Janata Party (BJP), which also leads the National Democratic Alliance coalition government in Delhi, and the Congress party - are working overtime to highlight the other’s shortcomings.

While the BJP has adapted popular Hindi tunes to lighten its official campaign, Congress relies on audio-visual cassettes depicting the BJP’s failure in matters of governance, particularly its inability to contain the riots that wracked Gujarat.

Speculation as to which party will win varies from expert to expert.

“There has been a whole slew of opinion polls,” says Dileep Padgoankar, assistant managing editor of the Times of India. “Some indicate BJP is heading for victory, while others are more cautious. But I wouldn’t want to hazard a guess.

“Several factors can change voter perception - the choice of candidates, the antipathy between leaders in the BJP and the effectiveness of the Congress.”

Siddharth Varadarajan, author of Gujarat: The Making Of A Tragedy, says BJP chief minister Narendra Modi will be the cause of his party’s defeat.

“I think the people of Gujarat have seen the result of Modi’s kind of politics,” says Varadarajan, who’s also a Times’ journalist. “(Gujarat) has become a place where violence can break out any time, businesses can be affected, lives are affected. It’s not a safe place.
“I think Modi will be defeated.”

Specifically, Varadarajan takes the government to task for “complicity of the state administration and the police” in the rioting and cases of “inciting groups to indulge in violence, covering up criminal acts and sabotaging (court) cases.”

He says the Congress party also will score points for the BJP’s failure to address problems brought on by drought and the downward economic trend.

“Because of the BJP’s inability to deliver on any of its agenda, you have to ultimately divide the electorate and divert them into non-issues, so that people don’t talk about the performance of the government, which has been pathetic.”

Thus, the religion card is getting strong play.

With the election commission warning political parties to desist from sectarian rhetoric, the BJP has shown some restraint in waving the saffron flag of Hindu nationalism.

But its appendage organization, Vishwa Hindu Parishad (VHP), has been busy rallying the “Hindu vote” - and inciting hatred, Varadarajan says - in a state where the tense co-existence of Hindus and Muslims has been tested regularly for more than a century.

“The growth of BJP in various parts of northern India has been on the strength of Muslim baiting,” says Padgoankar.

“The current campaign is being carried out on the notion of the Gujarati pride, but if you scratch the surface, it’s an anti-Muslim tirade. And the only serious opposition (the Congress party) is being led by Shankersinh Vaghela, who was previously with the BJP.

“The election, then, is a contest between a hard Hindu line and a soft Hindu line.”

Meanwhile, the election commission says it’s keeping a close eye on the situation.

Says commission spokesperson A.N. Jha: “Should there be apprehension or perceived danger to voting people from a particular community, alternate poll stations will be provided. Also, 94 senior government officers will function as observers and the international diplomatic community based in Delhi and the media will be given full access to the elections.”

When the commission took stock of the situation in Gujarat in August, Jha says, it “found that many people had been displaced in the aftermath of the riots and hadn’t returned home. So our electoral rolls were distorted. Also, the general situation was very tense, with a lot of apprehension and fear in the minds of people.”

With the Oct. 16 publication of a “home to home” verification of the electoral rolls and the steady return of people to their homes, the commission finally set the Dec. 12 date.
“We are keeping a watch on the situation,” says Jha.

“There are still some camps (for displaced people) and we could locate polling booths in those camps. At the same time, those people are likely to return by the time of the polls. The situation is dynamic.”
The election commission is also confident the electronic voting system that has been used extensively in India since 1999 has made election-rigging more difficult than under the ballot box system.
Whatever the election brings, Padgoankar thinks the BJP will find it hard to replicate the Gujarat situation elsewhere in India.

“Irrespective of the results,” he says, “all sides will have to engage in some hard thinking about why these things happen. What forces led to the burning of the train (at Godhra) and what accounts for the vicious reaction? Honest answers need to be given.”

Still, Varadarajan is fearful of a BJP victory.

“If Modi wins, then the BJP will start believing extreme communal violence and polarization will help them retain power at the centre for the next general elections in 2004,” he says.

“That will be alarming for the country.”