New Delhi: N R Narayana Murthy, Chief Mentor, Infosys Technologies Limited said that the India growth story is a wonderful one and that it must be ensured that a majority of the poor people benefit from the 10 per cent growth rate the country is seeing.
Commenting on the education system, he said that the needs of the poor people have to be addressed and at the same time, competition needs to be brought into the education system.
On the reverse brain drain scenario being seen today Narayana Murthy said there is much greater satisfaction in contributing to the country’s growth here today, there are newer areas where entrepreneurship is possible in India. “So yes, there are more and more people coming back and rightly so. This is the place where there is much greater opportunity,” he explained.
Talking about the strong appreciation of the rupee, Narayana Murthy said, “I feel happy that the rupee has become stronger. It shows that our currency is strong and that means India is growing faster, India is growing better and that there is greater demand for rupee than for dollars, that’s a good thing.”
Q: The India growth story that is being written right now, everyone says that a lot of good things are happening and we are moving towards becoming a global power, and that it’s not very difficult to achieve it. In a situation like this, people like you might be seeing fault lines and challenges in a lot of areas. What kind of challenges do you see coming when we talk about achieving a 10% growth rate?
A: It’s wonderful, we have seen an 8-9% growth. But I think there are a few challenges that we have to address. First, we have to ensure that this 8-10% growth rate translates to betterment for a large majority of poor people. They have to see more money in their pockets and more and more people have to get employed.
Secondly, we have to create an infrastructure so that we can go even higher. We need to create airports, ports, roads, power plants etc. Third of course, is our education system; we need to create more and more engineering graduates, more doctors, more lawyers, scientists etc. Unless we do these things in the next few years, we may not be able to live up to the expectations of a vast majority of Indians.
Q: You talked about infrastructure and education, and education is one of your pet subjects. On one hand, we are talking about opening more IITs and IIMs, a lot of the focus goes into higher education, not on primary education. We cannot get quality education from public investment. When we talk about a lot of foreign universities coming to India and our education would improve and we would be more competitive in the world, people object to that as well. What would you recommend in education to happen at the earliest?
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A: We liberalised our economy, removed licensing in the industry as early as 1991. Unfortunately, we have not de-licensed education. My suggestion is a completely de-licensed higher education and primary education.
In rural areas, where perhaps there may not be too many private sector people going into primary education, that’s where the government has to focus on primary education.
In urban areas and in higher education, in order to subsidise the poor people, they can use the voucher system that Milton Friedman espoused pretty early in the US. With that voucher system, there will be competition, good schools will progress and poor people will also not be inconvenienced.
We have to address the needs of the poor people and at the same time, we need to bring competition into the education system. Finally, there should be no licensing at all for the education system. I believe this to be the way forward.
Q: You are a global company; you have 11 offices in India, 33 outside, and you have a lot of manpower, both domestic as well as international. Are you seeing a trend where fewer Indians like going abroad and that they are getting more opportunities at home, because we keep hearing about a talent crunch in your sector?
A: That’s right. For the first time, we have seen a slowing down of people wanting to go abroad. In fact, there was an article in the newspaper that talked about a reverse brain drain, US having brain drain and countries like India and China seeing a lot of their people coming back to their country, because there are more opportunities here today. There is also much greater satisfaction in contributing to the country’s growth here today, there are newer and newer areas where entrepreneurship is possible in India.
So yes, there are more and more people coming back and rightly so. This is the place where there is much greater opportunity.
Q: I would like to talk about your business your sector. People say that because the slow down in America is eminent and there is credit crunch crisis, and on the other hand the rupee is getting appreciated, these three factors together are causing problems in the IT sector and these are now showing. Do you believe that?
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A: Not really, on the issue of the market opportunity, the US economy is still growing. And even if the US economy doesn’t grow well, that is also the time when there will be even greater opportunity for companies in India because those corporations will have to become even more efficient, that’s one.
Secondly, we also have considerable business in Europe, Japan, Australia, South America and Africa. So because we have a wide portfolio in countries in our sales portfolio, I believe that the opportunity for Indian companies to grow will continue to be bright no matter whether the economy of one country is doing well or not.
On the issue of the rupee-dollar exchange rate, at one level I feel happy that the rupee has become stronger. It shows that our currency is strong and that means India is growing faster, India is growing better and that there is greater demand for rupee than for dollars, that’s a good thing.
Secondly, we must remember that we import much more than we export. So our imports will be cheaper if the rupee becomes stronger.
Third after all this is a macro economic issue. We cannot worry about macro economic issues because that’s something completely beyond our control so why worry about it.
Q: From a share holder’s perspective, the kind pressure there is on margins and manpower which was an advantage is no longer an advantage now, and other countries are also doing well in the IT sector. How do you see the IT sector going forward, because this sector was a big factor of our growth engine? What are the possibilities for a scale up form here on?
A: I look up at the issue of the rupee becoming stronger as an important opportunity for Indian companies to become even more efficient. This is time when we have to enhance our work productivity, use even greater re-usability, improve our quality, control our cost and this is the time when we have to deliver better value to our customers. In this case we will actually be able to covert what is seen as a problem into a bigger opportunity.
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Q: You just talked about productivity and re-usability and you have always stressed upon innovation. Can you give us examples for entrepreneurs so that they know how to survive in this kind of environment?
A: Let’s say today that we take seven days to write a program. If we use tools, use re-useable components in our business, we can produce those programs in six days. In other words, we have saved 16% of the effort and we have done 100% of the work in something like 84% of the time. This means we can produce much more in a month, in a year, and thereby, we can earn more money per person than we were able to earlier. This how we become more profitable.
Productivity is extremely important. In fact, the difference between a poor country and a rich country is that in a rich country people are more productive than in a poor country so we have to focus on that productivity.
Q: Your business has not been much on the graph in the domestic sector. Now there are reports that USD 5 billion dollars worth of work is being done by government agencies in the IT sector and a lot of work still has to be done. What do you think, in future will Infosys work in domestic sectors?
A: We have been in the area of banking in the domestic sector, since 1986 or so. In fact, by all accounts we are the leading players in the banking sector in the domestic market. Certainly, we are looking at various other fields to add value to the domestic sector, it’s a very important thing after all, it’s a great privilege to add value to this country, it’s our country so why not.
Q: So if you have 60% plus business in America, will it change to some other file where a country like India will bring a major chunk?
A: Yes, it will happen, but it will take some time. At this point of time India contributes about 3%to the total revenue, US contributes 62% or so. So, to reverse that trend will take some time.
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Q: Whatever you have done is like a miracle. I had read that it is easy to convert USD 50 million to USD 100 million, but from USD 500 million to USD 1000 million, to erect a business like this takes time. In this value chain, where do you see the scalability for yourself. When I talk about Infosys, it is a trend-setter and it has also taken other industries along with itself. You have always been a conservative about acquisitions, people speculate that you will look towards business consulting, so what is the next big thing with you?
A: We have founded Infosys consulting, we have the Infosys BPO and in that sense, we have formed a full life cycle opportunity for us to serve our costumers. In addition, we are leveraging the power of the global delivery model in activities like consulting which people either too thought was not possible, in other words people sitting in India do part of the work that consultant in US were doing which means customers get better value for money, we can reduce the cycle time etc.
Similarly we are looking at new markets. We are today here growing up much faster than all other markets. We have recently acquired some businesses in Europe, we have started operations in Poland, we have just started operations in Mexico, we have our development centers in China both in Shanghai and Hangzhou, our Australian subsidy is doing well .
So in this various areas we have been focusing. I agree with you I think in terms of acquisition we are somewhat choosy. Certainly when we get a good candidate we will take aggressive actions.
Q: What kinds of companies are you are looking at, what type of businesses are you looking for?
A: Wherever there are complementary values, where ever there is an IP which will add tremendous business value to Infosys, wherever it gives us an opportunity to enter new markets, new application areas, new geographies etc we are certainly looking at it.
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Q: Which other sectors like IT can grow big in India and can be a global presence, where a big story can be played out?
A: I do think that biotechnology is a very very important sector, particularly because it plays a big role in enhancing agricultural productivity. In India we need to enhance the revenue productivity in the agricultural sector so that our farmers can have better disposable income, they can send their children to better quality of schools and they can take care of the health of their children and all of that. To do that, I think biotechnology is a wonderful new area and I believe that it will be another IT sector kind of success.
Q: Are you satisfied with the way government is addressing the issues of agricultural establishment? Are you concerned or do you think something that can bring the growth projection is down is the agricultural sector?
A: I wrote an article for the India’s 60th year independence celebration. There I talked about the eight important initiatives that government took. One of them is the Green Revolution which was started by Dr M.S. Swaminathan. If we have more and more people like Dr. M. S. Swaminathan visionaries, if the can government becomes a catalyst, if the government can give them full support in the area of agriculture, in the area of biotechnology, I have no doubt at all that we will make tremendous strides. But that’s a big ‘if’. If we don’t do that, yes I would say that the efficacy and efficiency of the various initiative started by the government will be low.
Q: There has been a continuous controversy over the planned acquisition of the SEZ zone, which is not yet resolved, but then too, they have business plans over it?
A: This is the problem is we have created ourselves, first of all there is no need to provide tax exemption to exports .I have arguing this with successive finance ministers, I have talked about it with Mr Jaswant Singh, Mr Yashwant Sinha and with Mr P Chidambram too. Once you remove this tax exemption this whole big attraction for SEZ will go.
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Second, we have to change our FSI rules for company’s to operate. For example, if we want to recruit 30,000 new engineers, which will be doing this year, at 200 square feet per person we need to build 6 million square feet. If the FSI is one is to one, which means we need something like 150 acres. There’s nothing I can do, if I want to recruit these 30,000 engineers and want them to use for exports and if I want to create those jobs I need 150 acres.
On the other hand, if the government were to come and say look you can have 1: 10 FSI I would need only 15 acres. Who is creating the problem here? It is not the companies, it’s the government. So the government has to take a reasonable policy decision to save these company’s can operate in high-rise buildings there can be FSI of 1:10, 1:15, then who needs large amount of lands.
Q: You have spoken about the government’s decision regarding agriculture land and FSI. I would also like to know your opinion over the current political scenario. For instance the left opposition over the Indo-US nuclear deal, how you are assisting the apprehensions of the political uncertainties?
A: First of all, I’m not an expert in this nuclear argumentation, so I shouldn’t be commenting on that. However, I would say given that we have nuclear experts in the government, given that the Prime Minister have lot of advisors, given that he is as patriotic as anybody else, given that he has consulted all the relevant experts, I as a citizen, I’m saying this only in my personal capacity, I have full confidence in our Prime Minister’s judgment. I will go with that judgment.
Having said that, after all this is a democracy, this is a system where pluralism prevails, different voices, different ideas, different opinions will have to come, they have to be discussed debate. But we have to do al of this quickly, in a manner that India is a winner. As long as all of us put India’s interest first and then say how do we say that India wins in the end very quickly, then I think this is alright. We have to have discussion debate why not.
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Q: Discussions and debate are okay, but here is the question of leave it or take it, if you are going to personalize the nuclear deal then the government has to face serious consequences, this is what Left has said. Do you think the way left has handled the situation is reasonable?
A: Again, as an outsider, I’m not the right person to comment because I’m not in politics. I think you have to ask this question to the politicians, you have ask this to the left. Who I’m I to comment?
Q: Some time back, you were to become a member of the CPI, a person with a socialist view, a wealth creator a capitalist so sometimes you feel of mixing both socialism and capitalism and play a role in the politics?
A: I have never thought of entering politics, but I’m convinced about one thing, that if we want to solve the problems of poverty in the country, it cannot be done by any means other then by entrepreneurship.
Only by creating a large number jobs with high disposable income, we can solve the problem of poverty. Only by enhancing our tax payers we can ensure that the government can spend money on primary education, primary health care and nutrition for the poor children.
So I would say that left, right, center all these things are irrelevant, what is relevant is are we able to create entrepreneurship and a large number of jobs.
Q: In the field of corporate social responsibility, how much are Indian corporate doing versus the kind of examples that we see outside like Bill Gates, Warren Buffets, Is that kind of generosity being seen here?
A: It is improving. More and more corporations have followed the examples of Tata’s and Birla’s, after all they did the corporate social responsibilyt act 50 years ago 100 years ago. Tata’s have done it, clearly they are number one in this area.
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But even at Infosys for example we have build hospitals in rural areas, we have build destitute homes, we have rehabilitated prostitutes, we have build libraries in 10,000 villages in Karnataka. We feed about, together with others, about 200,000 children everyday. So in our own small way we have done that. But definitely I think the awareness that the corporate have to participate is increasing, which is good.
Q: There’s a new mood in India where people say why should they think of jobs, they should become entrepreneur. For today’s entrepreneur there is lot of problems that country functions in this manner. What message you would give for this and where should we focus go from here?
A: I would say that we are at a historic time in this country when the confidence is high, when opportunities are a lot. At the same time the challenges are daunting. The external world has for the first time in the last 300 years paid attention to India and has respected India. So this is the time for our youngsters to come out with bright ideas, make sure they are market worthy, work hard, create good teams, have a good value systems and create millions of jobs so that we can remove poverty.
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