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.”

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