A strong sense of entrepreneurship, values grounded in humility, honesty and fairness, and an intense focus on creating value rather than wealth were behind the creation of the India’s first great startup, Infosys Technologies.
That was the takeaway of a rare interaction with the co-founders of the company — who came together on one platform for the first time in as long as one can remember to celebrate 15 years of Young Turks, CNBC-TV18’s marquee series that chronicles journeys of India’s startups.
Six of the seven Infosys co-founders — NR Narayana Murthy, Nandan Nilekani, S Gopalakrishnan, SD Shibulal, K Dinesh and NS Raghavan — came together to talk to Shereen Bhan about the company’s evolution, from a startup to India’s premier IT services company.
Established in 1981, Infosys emerged to become the poster boy of not just India’s IT revolution but also became an enterprise that sparked hopes in youngsters from middle class India that they too could make it big.
Large companies then either mostly belonged to the government or rich industrial houses who were somehow connected to it but these seven individuals gave up their IT jobs at Patni Computers to strike out on their own during the hostile 80s.
“There are three basic ingredients needed for running the entrepreneurial marathon: competence, commitment and character,” says Murthy. “All the co-founders had the three qualities I wanted.
” Nilekani, who was Infosys CEO between 2002 and 2007, credited the co-founders with having a common vision, similar values, complementary skills, a sense of deferred gratification and a willingness to subordinate their egos to a larger cause.
The importance of rallying people together to believe in a single cause cannot be overstated. In 1989, the company faced an existential crisis after a collapse of a joint venture it was in.
But barring one co-founder (Ashok Arora) who quit, the six others rallied around Murthy, deciding to hang on for some more time — even as K Dinesh says “we did not see the light at the end of the tunnel”.
The tide turned with the 90s liberalization and Infosys went global, offering to build excellent IT systems for western companies at a fraction of the cost it would normally take them.
The three pillars that Murthy outlined helped the company go a long way. Its commitment and focus on quality was unwavering.
Shibulal recalls how, in the 80s, the duo was working late in the night to install a client’s IT system and called to inform them of an error they had discovered. “From thereon, the client developed so much trust in us, they handed over their entire testing process to us.”
Fairness was also the bedrock of the company’s value system. It is well-known today that the company was the first in India to offer employee stock options plans (ESOP), as a way of “democratising wealth”.
Dinesh mentions how Murthy and Raghavan, on their own, redistributed their shares to give 3 percent each more to Shibulal, Arora and him out of their own stakes, because they felt the trio deserved more. “Today, we would not have been billionnaires [had it not been for that decision].”
The founders focus on creating a great company — “wealth is only a byproduct,” says Nilekani — and the conviction to never compromise on the long-term path at the cost of short-term incentives led the company to always be conservative in its forecasts and aggressive in its reporting of bad news. “
Our stock fell 40 percent in one day soon after the dotcom bust when we halved our guidance,” Shibulal says.
It was this conviction that also led the founders to decide to step away from Infosys when the time came. This ensured the company underwent a historic transition to a professionally-run one when CEO Vishal Sikka took over a few years back. “
It is was a sad but also a happy occasion,” Murthy says of the handover. “It’s like giving your daughter away. You know you’re leaving her in stronger hands.”