DeCode: Murthy 2.0 begins,with a week long reality check
Narayana Murthy will have to convince investors about the efficacy of the 3.0 strategy.
A second innings is never easy. While people are quick to refer to Steve Jobs and how he made a historic comeback at Apple,it may not be prudent to expect everyone to do the same. NR Narayana Murthy’s comeback at Infosys is important for the struggling IT major,but for the man himself it will be an acid test.
No doubt,he has steered Infosys out of many pitfalls in the past but the environment is vastly different today. At his prime Infosys grew at a rate of 30-35%,leading the industry. As the bellwether of the Indian IT industry,the software major enjoyed cult status. Narayana Murthy,Nandan Nilekani,Kris Gopalakrishnan and NS Raghavan represented hopes of a rising middle class. Infosys shareholders turned into millionaires and for investors it was always the bluechip stock to buy.
But over the last five years,the IT world has turned topsy turvy and no one is assured of anything,anymore. With each passing quarter,the environment is getting tougher. But then tough times require a tough hand and Murthy’s return is not a quarter too early. It is easy to guess that he will lose no time in getting people focused on the job at hand. With Murthy back on board,the rest of the management crowd will now look like school kids.
The job ahead is a challenge,but Murthy is not a stranger to it. Infosys’ revenues in its first year operation was $140,000,making a profit of $30,000. Today the $7 billion plus IT major is at a crossroads. Murthy has always craved respect for Infosys. And whenever there has been a situation wherein he felt respect was compromised,he has intervened. When he left Infosys in 2011,he had told
me that he would like Infosys to be a truly multi-cultural organisation with local leadership and local talent. He wanted Infosys to shift from a linear revenue model to a non-linear one. “It should be a big global brand,enjoying instant recognition,” he had said then.
The fact is that those thoughts still remain a dream. Infosys is not yet a multi-cultural boat. It’s not a global brand in the true sense. While the company has been trying to increase its local hiring in Europe and US,no great hire has been routed into Infosys at the very top. In his second innings,Murthy is also likely to have a closer look at emerging markets. Brazil,China and Mexico are growing steadily and so are the opportunities. Infosys needs a quicker time-to-market strategy and it needs to control costs. Margins need to be enhanced and training of employees should not be neglected.
Murthy will have to convince investors about the efficacy of the 3.0 strategy. SD Shibulal,the company CEO,has spent a good part of his tenure trying to explain what the strategy is and how it will help the firm. But still there seems to be a smokescreen around it. The 3.0 strategy in essence was about doing transformational projects for clients and focusing on developing software products and platforms. Murthy may have to give
further shape to this and tweak it,if needed. It is possible that the 3.0 strategy is a little ahead of its time,considering how clients have been cautious with their spends.
It will also be interesting to see how he works with his son
Rohan,who has been drafted in as his executive assistant. Rohan Murty is a PhD holder and it will be fascinating to keep a watch on how he will provide his father with the necessary analysis—and a youngster’s point of view. One constant criticism against Infosys is its inability to infuse new blood at the higher management level. With Rohan’s presence,youngsters in Infosys are bound to feel fresher.
The whole of last week,Murthy was engaged in a series of meetings with the top management. There is an intense reality check happening. Top clients have started to circle back at the Infosys headquarters in Bangalore and seeing Murthy in the chairman’s chair will be a great confidence booster for many among them. Murthy 2.0 has started rolling.
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