Value for Money

This is an experiment in leveraging the strength of India8217;s talent in IT and other hi-tech areas, and Bangalore is the crucible for that because of its history, a certain focus on hi-tech over the last 20-30 years. Bangalore has indeed emerged as the place for MNCs and Indian companies in the hi-tech area to operate. It is also the place where entrepreneurs come and prosper.

8226; We are used to the idea now of this place being the hub of the hi-tech sector. Think back to 1981 when you began this journey, you did not come from a traditional Indian well-connected, wealthy family, you did not have those advantages, so how did you set-up this empire?

Well, you are right. We didn8217;t have any financial strength, we didn8217;t have any connections as was needed in the India of those days. But right from day one, we focussed on the global market, on leveraging our strength. So, we did not need any patronage from the Indian bureaucracy and politicians, except that we needed basic infrastructure like telecommunication, data communication and of course, less and less friction to business because we were operating outside India. But between 1981 and 1991, we had tremendous friction to business. At a point it took us around three years and about 25 visits to Delhi to import a computer worth 50,000, it would take us about 10 days to get approval to travel outside India. We couldn8217;t hire consultants in quality, brand equity etc. from outside India. It took us about a year to get a telephone line.

8226; In which case your product and your ideas had to be far better than the competition to make it work.

Yes, I think as ultimately we had overcome that friction and still managed to satisfy our customers.

8226; Today what is happening is basically the globalisation of white collar work. We have seen a long time ago the globalisation of manufacturing but now it is all the different aspects of white collar work.

Absolutely, you are right.

8226; Well, that could be endless. How deep and how broad is your ambition?

Our ambition is to leverage the power of what I call 8212; a collaborative distributive development model 8212; which means that in a certain activity some of the sub-activities may be the best in India, some other activities may be the best in the UK, the US etc. For example when we design a piece of complex software which has to run on some hardware, then probably we would do the customer requirements in the US because that is where the major markets are, we could do the architecture in the UK and we could do the software design in India. Then bring all this together to satisfy customers all across the world and also create more jobs.

8226; You talked about creating jobs 8212; and that is where the problem is 8212; because in the rich world, particularly in the US, the perception is that people like you are robbing them of jobs and we saw that during the presidential election last time, it was a major issue.

Let me explain that to you 8212; when I get up in the morning I use my LG refrigerator, a South Korean product. You know we had our own refrigerator industry but it could not compete with these MNCs so it closed down, and jobs were lost. Then I drink a Coke or a Pepsi 8212; we had our own soft drink industry but they closed down and jobs were lost. Then I use my Toyota 8212; we had our own car industry, not very good but still, and it too had to close down and again jobs were lost. Then I come to my office and I use my Toshiba laptop or my Dell desktop 8212; we too had our computer industry but it could not compete with the global giants and they had to close down 8212; so you see again we lost jobs.

Now, I could take two views, the first view is we must keep these MNCs away as they cause loss of jobs 8212; probably five million jobs. The second view is these MNCs have enhanced competition in India, they have enhanced customer satisfaction, as a result, 200 or 300 million Indians have benefited. I would like to believe that a paradigm which has benefited 300 million Indians is much better than not having that.

8226; You are now contemplating that the globalisation of this white collar work caused the destruction of large employment opportunities in the US and the UK. Human resource officers, personnel, all sorts of other basic jobs that millions of people do in these countries can be done so much cheaper in your offices, your call centers and that is the fear.

Well, the US has created five million jobs in the last five years. What we are trying to do is make the US corporations more and more competitive, not just in the US.

8226; Many US corporations are expecting to have 25 per cent and more of their workforce in India.

The US has been the most successful country in the world in services exports. Now for the first time in history, Indian companies have the opportunity to add value to the global market, and I think we need to be fair and provide them this opportunity.

8226; But if you push this too far, then you could end with an extremely dissatisfied client base. It is not necessarily a case where the more it is done, the more it will be done in the future.

I don8217;t think so, as long as Indian companies satisfy customers, bring innovations to the table, and add value 8212; why will the clients go away?

8226; What motivates you 8212; is it money?

I think I have enough money! There are about 15,000 of us in Infosys who have made decent sums of money and there are another 25,000 who have not made that kind of money. So as somebody who believes in fairness I think we need to work hard so that they too can make some money 8212; that is what motivates me and then I feel it is a rare opportunity India has got to add value to the global bazaar. Finally I think it is an opportunity to bring value to society.

8226; I believe as a young man you were attracted to Communist ideas, deeply concerned about the inequalities in the country. I would like to read out something to you that was written by Dr Kamal Munir who teaches strategy and policy at Cambridge University, he has looked at your company and India8217;s hi-tech boom and has concluded, it is the middle class and the rich who have gained from the IT boom in the country. This growth will be unsustainable. IT did not and can not deliver clean water, sanitation, education and health care to the poor.

Yes and no. I don8217;t completely agree but yes, he is right to point that IT jobs are available to the middle class who have had a decent education. On the other hand technology is about reducing cost, improving productivity and bringing comfort to people. Who needs that more than the poor? We have leveraged IT to deliver remote medical advice.

8226; But 60 per cent of Indians are the rural poor, they are the peasants.What possible relevance does your business have to them?

For the first time the IT industry has demonstrated that it is possible to be world class being in India, it is possible to create jobs.

8226; Only one million jobs have been created in the recent years but nine million Indians enter the job market every year.

That is the point. Many times people ask me what is the biggest contribution of Infosys, I tell them that thousands of entrepreneurs have been enthused by this whole experience. They say that if these seven jokers could do it then we can do it too. So I feel we have unleashed power. By entrepreneurship jobs can be created, and problems can be solved.

8226; Then why did local people in Karnataka burn your effigies some days ago, claiming that you were doing nothing for them?

We have created 26 per cent of the total jobs for the people from Karnataka, that is out of the 40,000 jobs we have created, 10,000 have been given to locals. What happens in our society is people don8217;t use data. They don8217;t make an analysis before coming to a conclusion, they go by hearsay and that is sad.

8226; Look at the political reality. In the last state election, the man who won the election ran on a campaign that the urban elite in Bangalore and this sort of a place had it too easy for too long and had too much of the cake, now the cake has to be redistributed to the poor.

Well, you saw the roads, you have been in Bangalore for the past couple of days so you must have seen that this is not really the best of anything. In fact we have to work hard to improve this. Let us remember 32 per cent of India lives in urban areas. Bangalore contributes to 60 per cent of the taxes. I think it is only proper that we use some of that to make sure that Bangalore becomes better.

8226; I know you want new shining airports, better road communications to help you bring in the businessman who comes to your site. Will it not be better to use that money for a schooling system for the rural poor, irrigation systems for farmers? That is the debate in India.

The problem in India is not that money is not being spent on all those activities. Whatever money is being spent on those activities is not being used properly. Infact the late Rajiv Gandhi himself said that out of every Rs 100 that is spent on these mega projects in the area of healthcare, education or shelter perhaps, only Rs 15 reaches people and the rest of it is pocketed by middlemen. That is the problem. Our politicians must realise that they straddle multiple worlds 8212; the urban and the rural, the rich and the poor, the haves and the havenots8212; after all, these people have been elected to represent all these constituencies. So, we have to make sure that whatever money is spent to alleviate these conditions is used properly. Let us do that first, then more money can flow in from all these urban activities.

8226; Increasingly many Indians feel that companies like Infosys are not a part of India. Physically they are, but in many ways they are a part of the globalised world that has nothing to do with most of them. Let me quote Nandan Nilekani, who succeeded you as CEO, said it in 2005:8216;8216;Our body is in India but our head is in New York.8217;8217; It is not something that most Indians would want to hear.

He said that in the context of a company that is customer-oriented. Let me tell you Infosys Foundation works tremendously for the poor. Recently, we contributed a decent sum of money to the victims of the earthquake in J038;K and Pakistan, we contributed to the flood victims in north Karnataka and also to the victims of Hurricane Katrina.

8226; Well let me ask you, about the growing global competition. How do you think are you going to deal with the Chinese threat?

At present India is at least five years ahead of China because of knowledge of the English language, then the project managing experience of Indians.

8226; But China has something which you have acknowledged that you don8217;t. It has a government that can deliver infrastructure, roads, communication. If the Chinese want something, the Chinese government can deliver it. This government cannot.

We have been discussing with the leadership at both the state and the central level that India has to run faster to maintain the lead it has over China. I think in terms of higher education and talent availability, India has a decent advantage.

I hope our politicians and bureaucrats would listen to people like you and act quickly.

8226; You are retiring in 2006 as Infosys chairman. Is that because you think you have done as much as you can or is it that they are looking for a younger man?

I gave the managing director8217;s position in 1998, then I gave the CEO8217;s position in 2002 because I believe younger people should be given opportunities and also I am turning 60 next year and as a rule I will retire.

8226; If you can look ten years into the future do you think India will be in the lead when it comes to global technology?

India will continue to lead as long as our politicians, bureaucrats, corporate leaders and academicians realise that we have to work harder and smarter need to do things with a sense of alacrity, we need to create better physical infrastructure, better education infrastructure.

8226; And if you do not8230;.

Then I don8217;t think India will have the position that it has today. There is no doubt about that. All these advantages will disappear like dew on a sunny morning if we become complacent, if we don8217;t act with alacrity.