Lokvani Talks To S.D. Shibulal, Co-Founder, Infosys

Lokvani Talks To S.D. Shibulal, Co-Founder, Infosys

Chitra Parayath
11/19/2003

For a co-founder of global Information Technology (IT) blue-chip Infosys, Mr. S.D. Shubulal (Shibu to his friends) is amazingly down to earth and easy to talk with. He is currently Director, and Head of Worldwide Customer Delivery, and continues to play a pivotal role in Infosys's astounding growth. In an exclusive interview with lokvani, Shibu shares his thoughts on the early days of Infosys, the booming IT industry in India, secrets of successful entrepreneurship and todays challenges, among other things.

Lokvani: Starting Infosys must have been a leap of faith back in those days. How many people did you start with and how much capital went into the venture?

Shibulal: We were seven of us when we founded Infosys in 1981. The initial capital we could bring was all of Rs 10,000. However, though we were low on capital, we were high on enthusiasm, determination and aspiration.

Lokvani: You must have had very high ambitions at the start. Tell me, did you dream of achieving this size and international strength? What was the time frame you set yourself?

Shibulal: When we started out, the IT industry in India was still in its infancy. At that time, India as a software destination was a distant reality. In addition to difficulties in securing capital, we faced a lot of challenges in building infrastructure, importing computers, getting foreign exchange and securing visas.

At that time, our aspirations were to start a professional company that would match global standards. In many ways, it was more of having big dreams though we were not sure how much we would eventually achieve. Personally, I did not have any set time frame; all I had in mind was to do my best.

Lokvani: What was the initial business plan of Infosys based on?

Shibulal: We started off with one client and right from the beginning understood the concept of an offshore delivery model. Conceptually, we tried to leverage globalization for customized software development - producing where it is most cost-effective, and selling where it is most profitable, all without being constrained by national boundaries. Importantly, we always paid utmost importance to execution. I believe that the key to success is to ensure that we execute our engagements well every time. We have based our whole operation on a foundation of strong value systems. We were careful never to compromise on that despite many challenges.

Lokvani: From the start you saw yourselves in global terms, which I guess must have been pretty extraordinary in 1981. The whole conception of starting a global company in India must have looked pretty radical back then.

Shibulal: Our dream has been to build a world-class organization, employing the best talent, creating wealth ethically and legally, and distributing it to all stakeholders. In that sense, we were probably one of the first. However, I don’t think we can ever afford to get complacent at any point of time; there is still a long way to go and we are striving hard to achiever greater heights.

Lokvani: What are the actual advantages of starting up a business like this in India?

Shibulal: The most important asset in any knowledge-based industry such as IT services is availability of high-quality people. India has a significant advantage because of its large pool of English-speaking, analytically strong, technical talent with excellent work ethic.

Lokvani: How global are you? And how many offices do you have abroad?

Shibulal: Infosys is a global company with about 30 offices around the world, employees from about 34 nationalities and clients from almost all major nations. The company has Proximity Development Centers (PDCs) in the US and the UK, and Global Development Centers (GDCs) in Canada and Australia. We have a representative office in China and are in the process of starting a new development center there.

Lokvani: What role did Government (of India) liberalization play in helping Infosys going global?

Shibulal: The government played a critical role and enabled IT companies such as Infosys to succeed. The liberalization of the Indian economy in 1991 changed the Indian business context to a free, open market orientation for hi-tech companies. It improved the velocity of decision-making by removing most of the licensing requirements and enabled us to easily access the capital markets, build infrastructure and compete successfully in the global market. The positive impact of liberalization can be seen in the significantly improved performance of software exports post 1991.

Lokvani: More broadly speaking, do you think that globalization has been good for Infosys? On the whole, and in the long run, would you say globalization is good or bad for developing countries (like India)?

Shibulal: Yes, Infosys in many ways is a child of globalization. Infosys has demonstrated that Indian companies can benefit from globalization. If you look at our revenues, over 95 percent of our revenues come from the G-7 countries. In fact, about 73 percent of our revenues come from the United States, about 17 percent from Europe, about 5 percent from Japan, and the rest from elsewhere in the world.

Globalization is here to stay and that has implications for all nations. Moreover, services will play a crucial role in India’s economy. We are still in the beginning of the service discontinuity and globalization of services will reshape our world. In this context, I feel India can emulate the IT success in other services areas. We can leverage our high quality, English-speaking manpower in service sectors such as education, tourism, entertainment, engineering services and business process outsourcing.

Lokvani: What was the turning point for Infosys?

Shibulal: Our growth in the 1980s was not really spectacular. In the late 80s, we realized that we need to prepare ourselves for the next leap. This meant taking tough decisions to invest aggressively in building world-class infrastructure, put in place robust processes to recruit, retain and develop employees, and invest in building the Infosys brand.

Lokvani: What has kept the Infosys team together through all these years?

Shibulal: The most important factor is a set of shared values – We have always operated such that we respect each individual. In addition, the team brought together a set of complimentary skills. We also wanted to prove that it is possible to be profitable through ethical and legal means. Importantly, we continue to be committed to our shareholders, employees, clients and the society-at-large and to taking Infosys to greater heights.

Lokvani: Do you think infrastructure problems remain the major stumbling blocks in the way of the info-tech sector's growth in India?

Shibulal: Yes, infrastructure is a major area for development. While there have been many serious initiatives and substantial improvement, there is still scope for improvement. Telecommunications, public transportation, flight accessibility and town planning are areas that can be improved.

Lokvani: Do you think the IT boom has made India a contender to be one of the most developed countries in the world?

Shibulal: The IT sector has definitely given India recognition in the world. However, we still have a long way to go and there are many areas that need to be improved if we are to become a truly developed country. Many of our human development indices are still in the bottom half. Growth has still not reached the under privileged classes. Unless, we solve these challenges, we cannot aspire to join the ranks of developed nations.

Lokvani: China is fast adapting itself to the English-speaking world. If China catches up with India on the language front, do you see India losing its edge in the info-tech market?

Shibulal: From a long-term perspective China offers significant opportunities in the IT services space. In many ways, China is an opportunity and also a competitor. China offers both a market for services and a source to develop software. The local talent pool provides an opportunity to service markets in Japan, Korea and other nations in that part of the world.

Definitely, China has the potential to catch up with India. Therefore, it is important that Indian companies consciously improve on the value proposition that they offer to their clients.

Lokvani: What is Infosys' rationale behind its acquisitions abroad?

Shibulal: We consider well thought out acquisitions as a means to help us grow and enter new markets. Further, any acquisition the company makes will need to be strategic and must improve our current service offerings. We are on the look out for the right fit. Meanwhile, the company has made smaller acquisitions. Our Banking Business Unit recently acquired the trade finance arm of US-based IQ Financials. This acquisition helped our Banking Business Unit reduce time-to-market for its treasury product as well as facilitated direct entry into markets such as the UK and the US in this space.

Lokvani: Which Indian company has impressed you or inspired you most?

Shibulal: Reliance is an instance of a company that has dreamt big and more or less achieved its global aspirations.

Lokvani - Did you have any role models who inspired you in your career?

Shibulal: I have derived inspiration from a number of people at various points of time in my life. I believe different people excel in different ways and one should derive inspiration from the best qualities of various leads. At a personal level, Mr. Murthy (Mr. N.R. Narayan Murthy, Chairman, Infosys, Ed) has inspired me to excel whatever I do.

Lokvani: What advice would you give to the next generation of entrepreneurs?

Shibulal: It is necessary to dream big. However, success depends on execution. This translates into having the right processes and creating the appropriate organization structure among others. In today’s age it is also very important for leaders to inspire and lead from the front. Above all, one must be patient and be prepared for the long haul. Typically, nothing significant is achieved in a short span of time.

Lokvani: What about software professionals looking for employment in this tough market?

Shibulal: The software industry has faced challenges because of worldwide events in the last few years. However, I believe that inherently the sector has strong fundamentals. IT industry is all about people and intellectual capabilities. Therefore, it has great potential for young people. It is an industry that recognizes and rewards talent. However, software professionals need to understand that it requires a lot of hardwork and determination to be among the best in the world. My advice for software professionals is to build a sound knowledge base. More than ever, there is no shortcut for merit.

Shibu and his wife Kumari live in a South Shore suburb of Boston, MA with their two children. Kumari is the chairperson of Akshaya, a charitable trust they founded to help needy children in India. Akshaya offers scholarships, and has sponsored over 1000 children for free heart surgery in the year 2002.

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