Narayana Murthy, the co-founder of Infosys who is often referred to as Father of the Indian IT sector, held a question-and-answer session with university students at a grand reception hosted for him at McGill University in Canada, one of the nation’s top two schools. Murthy also received an honorary degree last week from McGill’s business school, the Desautels Faculty of Management.

The reception was hosted in conjunction by students from McGill’s Entrepreneurs Society and Indian Students Association. Mr. Murthy discussed his vision for the IT industry in India and his hopes for expansion of the products Infosys provides. He also emphasized the necessity for competition from foreign companies to increase IT growth in India. He shared his solution to the lack of women executives in Indian IT, and encouraged McGill PhD students to work on developing models of measuring productivity for telecommuting workers to solve this problem. He spoke about the need for privatization of almost all industries in India with the exception of higher education, which would require a need-blind admissions approach.

An Interview with Narayana Murthy:

You have always been pro-globalization. It is amazing how in 1981 you positioned Infosys as an outward looking company meeting the global standards. With the push for Make in India what lessons can the manufacturing sector take from you?

For us to succeed in India, we have to bring into the country some leading global players in every area of manufacturing, which the Prime Minister is now trying to do. We have to learn from them and compete with them. The moment you keep global products out and keep people away from competition, and start focusing only on whatever is available in the country, the quality will go down. If we are not open minded to invite the world’s best people to our country and create a congenial environment for them, there would be no hope for India.

In my own company, we took the option of learning from these multinationals and the reality is that we grew faster than them, were more profitable, retained employees better because we learned the game from them and improved on them.

The growth of Infosys has been parallel to growth of Indian economy. From a modest capital of $250, Infosys has risen to a $36 billion market cap. Did you envision this journey or was it more accidental?

We had to provide different business value propositions and we had to provide better quality in software. In 1981, large projects required 100 to 200 man-years, and their success rate was 45% in the United States. People would spend millions of dollars and jump their project. So we said our objective is to get 95-98% success rate of these projects. What was taking 100 hours last year should take 90 hours this year, and 80 hours next year.

In every project there is a class of activity that requires considerable interaction with customer. It should be developed on the customer site. Other activities have very little interaction with customers. We said we will deliver these tasks from remote developments in countries like India and at some point of time in China. About 20% has to be developed on the customer side and 80% in remote places, in such a way that the customer gets tremendous benefits and instead of taking up 1 project, a customer could take up 1.5 projects.

With the growth in export expected from services sector, IT has to take the lead in innovation. Where do you see the sector going from here?

When the Indian companies went to customers sometime during the early 2000s, customers said, here is Accenture that has consulting, software services, and business process management. So they are a one-stop shop and they connect the boardroom with the boiler room, whereas you guys just provide software services. Therefore, it is difficult for us to work with you, because those guys are able to connect. That’s why Indian companies took consulting on one side and business process management on another side. As companies do more reengineering of their processes, they realize there is greater opportunity for outsourcing business process management. That is where I believe the industry is going pretty fast.

Can you see Infosys in the future making products that are open to the public, for people to use at home?

I agree that we need to do more, but the problem with products is that you need to have the required smartness to embed yourself into the DNA of corporations like Microsoft has done through its exchange server. In my company, we don’t want to touch the exchange server. Mails are coming and going, so why would we change it and put some other thing. Because of that server, Microsoft Office is also bought and because I want Microsoft Exchange, I use Windows. Products have an innate tentativeness as they are easily replaceable. If you have attached yourself to the DNA of organizations then it is very different. The key is to get to such products which are not easily replaceable.

Do you feel that railways in India, like airports, should be privatized?

Railways have to be privatized. Till 1948 or so, lots of companies operating in the area of railways in India were all private. It’s only after we got independence that we started nationalizing them. The government has to stick to its mandatory functions including monetary policy, law and order, etc. It should be possible for almost every other area to be privatized because our own experience for 16+ years in public governance systems of these areas has been less than exemplary. However, there is one issue here.

I am still not a great fan of higher education being in the private sector, unless they operate on a need-blind basis. If the private sector can operate on a need-blind basis, then it will be alright. But in a country like India, where poverty is much higher than in Canada or the US, it is much harder to operate on that model. So we will have to come up with a model where even if education operates in the private sector, the government will have to offer huge subsidies on a per- student basis.

Do you foresee that corporates can come ahead and take the lead in higher education in universities in US and Canada?

In the last five years, 90% of new universities that have been started are all by corporates or by a group of enlightened individuals who have teamed up with corporates and started it. Every one of these universities must learn to operate in a need-blind basis; otherwise, we will create a society that is not fair and that does not have compassion.

As the industry is fairly male dominated, what steps does Infosys take to encourage equality?

Out of 25,000 software engineering trainees that we recruited this year, 49% were women. But if you ask how many VP executives we have who are women, there are none.

We still have not come out with models of measuring productivity for telecommuting. Therefore, while a lot of people have talked about operating from home, most corporations in private don’t encourage that. So therefore, we are not making the lives of our women employees easier because we insist on their coming to the office.

What I personally believe is that for a wonderful business school like this one, you should work on models of productivity. There could be 4 or 5 Ph.D. students, one of whom will go to retail industry and work on models of productivity for managerial or sales staff in that industry. Then if those theses are released, it becomes very easy for the industry to absorb those and create models of productivity.

Today we see a lot of students starting companies and even dropping out of school for the same. What do you think about this and what would your advice be to student entrepreneurs?

There are several examples of people who dropped out of school and became very famous entrepreneurs. But there are a much larger number of people who plunged into entrepreneurship when they were students, and we don’t hear of them. It’s not that anybody who leaves college and gets into entrepreneurship when he or she is in college will succeed.

One, you must have an idea whose differentiated business value to the market can be expressed in a simple sentence. If you can’t, your customers and employees won’t join you and venture capitalists won’t support you.

 Second, it is very important for you people to think of some method of assessing the market using very little money.  While your idea might be extraordinary, it is very important to pitch it to the market and assess if the market is ready to buy your idea.

Third, entrepreneurship is all about deferred gratification, so make sacrifices today in hopes that tomorrow will bring a fortune. You will have to undergo considerable discomfort in initial years, be away from loved ones, take much less salary than you deserve, stay in inexpensive hotels, and get rejected by everybody and his brother in your initial years.

Finally, you need people who understand technicalities of your idea, and you need people who understand how to sell it. If you don’t have people who know how to sell, don’t go to the market. You need somebody who understands finance. You need people who know how to manage money, because money is very scarce in the initial days and those who know how to manage it will save you. 

Get a great idea, a great team, great values, and a market that is ready, and the rest is all very simple.

What we see today is that money is a huge driving factor for students looking for jobs or even entrepreneurship but for you, even after all the success of Infosys, you continue sticking to the 'Simple life, High thinking' principle. What is it that keeps you grounded? Have there been instances when your children called you out for not buying expensive cars or travelling in first class?

We have been very fortunate in that my wife has given our children a good value system and a good education. My daughter went to Stanford, and my son did his Ph.D. from Harvard. They have a good education and good values, and they understand that it is very important to connect with the less fortunate sections of society not only in India, but also in the US and UK. I am convinced that the only way societies can create good citizens is with the help of mothers who spend so much time for the betterment of children, and so all of us must be very grateful to mothers, because without their sacrifice and without their focus on betterment of children, society would not progress.

We tend to compare the Silicon Valley of California to Bangalore. Do you ever see Bangalore reaching the level of performance of California?

While I would very much like to say yes, I think it’s unlikely, at least in the next 20 years for a very simple reason. The US and Canadian higher education systems are the most advanced in the world. They are oriented towards applying what you learn in the classroom to find solutions to the problems around you. Second, Silicon Valley has created such a wonderful learning environment that the level of the whole environment goes up when Facebook succeeds or Google succeeds. It’s not just one company. The entire ecosystem becomes better. Failure is not looked down upon in the US, whereas in a society like India we are not very comfortable talking about failure. So that is a big mindset change. That will take a good 20, 30, 40 years to change. I don’t see how Bangalore can become like the Valley in the near future.

Is there any advice you would like to give students?

All I would say is that values are very important. Whatever you do, ask yourself this question: Will this action of mine enhance respect for myself and for my entrepreneurship? If you ask this question, you will go from strength to strength to strength, because at the end of the day if you receive respect from every one of your stakeholders, customers, employees, investors, vendor partners, and government of the land and the society, your revenues will grow, you will get better and better employees, you will get better quality investors, and the society will look at you with lots of affection and consequently your market capitalization will grow. So ask the question, will my action enhance respect for myself and for my company?

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