Murthy Traces the Source of India’s Software Boom
The numbers are staggering. Employing more than a million people, the software industry in India has been growing at a rate of 32 percent annually for the past five years, said N.R. Narayana Murthy before a packed audience at the University of Illinois Auditorium. In addition, more than 70 percent of major U.S. tech companies rank India as their primary source for offshore work.
“We have indeed come a long way from being short order cooks to being chefs,” Murthy said at U of I’s annual Arnold O. Beckman Lecture, co-sponsored by CSL. “We’re now being looked at as long-term partners.”
What better person to speak about the rise of the Indian software industry than Murthy? His company, Infosys, has grown into an IT services powerhouse and Murthy has become one of the most famous and admired businessmen in the world.
In 2004, Time magazine named Murthy one of the top 10 most influential leaders shaping technology. In 2003, Ernst and Young honored him as “World Entrepreneur of the Year” and Fortune magazine selected him as one of Asia’s two “Businessmen of the Year.” In 1999, BusinessWeek named him one of nine “Entrepreneurs of the Year.”
Not bad for someone who started his company in 1981 with six other software professionals and $250 in capital.
Murthy's brand of capitalism has often been called "compassionate capitalism" and some have even dubbed him the "Mother Teresa of the Tech World." He has a reputation for high business ethics and a willingness to share the wealth with employees. For example, his company was the first in India to make stock options available to its employees, creating millionaires at all levels of the company.
In tracing the success of the Indian software industry, Murthy pointed to many factors, but one key was the government reforms of 1991, which made it much easier for Indian companies to establish sales offices outside of India. It also removed many other obstacles to Indian businesses, reduced the duty on software exports and offered tax concessions.
After 1991, the growth of the Indian software industry increased by a factor of 100, Murthy said.
Murthy also outlined several important concepts on which the Indian software industry operates. The first is globalization, which he defined as “sourcing capital from where it is best available, producing where it is most cost-effective and selling where the markets are without being constrained by national boundaries.”
Globalization has made it possible for Indian companies to develop software for businesses in over 130 countries, including more than 250 Fortune 500 companies in the United States.
Another key concept is their Global Delivery Model, in which teams in different geographical locations collaborate on projects “and work together like a symphony orchestra,” he said.
Looking to the future, Murthy said companies must continue to adapt to customer expectation with “speed, imagination and expert execution.” And as growth continues, he said the challenge will be to make sure that “the soul of a small company exists in the body of a large company.” As he put it, “How do we make sure that the value system of the company remains intact when you keep adding 5,000 to 10,000 employees per year?”
Last year alone, he said, Infosys received one million applications from engineering graduates for 7,000 positions.
“But there is an even bigger challenge,” he concluded. “We must help to reduce the divide between the haves and the have-nots. At the end of the day, unless the industry sets a good example in reducing the gap between the rich and the poor, we would not have really added value. We must do this in India first and the world next.”