NY Times profiles Infosys founder NR Narayana Murthy:
December 16, 1999
India's High-Tech, and Sheepish,
Capitalism
By CELIA W. DUGGER
ANGALORE, India -- The slight, bespectacled computer
engineer who starts each day by cleaning the toilet in his family's
small, spartan house hardly seems to be the new archetype of a wildly
successful Indian entrepreneur, boldly steering his country away from
decades of state-dominated, bureaucratic socialism and into a new era of
capitalist growth.
But in India, where a long line of Hindu ascetics has captured the popular
imagination -- most famously, the independence leader Mohandas K.
Gandhi -- it is fitting that one of the country's most influential champions
of capitalism and hottest software tycoons should be a man who lives as
if he were a humble civil servant.
The man, N. R. Narayana Murthy (pronounced MOOR-tee), was
making $25,000 a year as a software engineer in a Bombay company
when he founded Infosys Technologies Ltd. in 1981.
He sheepishly estimated his net worth at $600 million in stock recently as
he sat on a plain, angular couch in his living room, harshly lighted by a
bare fluorescent bulb. As the gap between the richest and poorest
widens in booming cities like this one, Mr. Murthy, 53, the son of a
high-caste Brahmin math teacher, says the new rich must live simply,
even austerely, if capitalism is to become an accepted model for social
betterment in a country where 300 million poor people still struggle to
survive.
The extraordinary rise of Mr. Murthy, his company and the software
services industry in India has come to represent the hope that what he
calls "compassionate capitalism" can provide decent, desperately needed
jobs and the national wealth to improve health and literacy levels in a
country whose population has more than tripled since it won
independence from Britain in 1947.
"If we want to sell capitalism to the people, we have to practice a lifestyle
that does not seem unattainable," he said. "We want more and more
people to become entrepreneurs. If the tea stall owner in a small village
can say, 'Hey, these guys can do it; so can I,' and get his business into the
next orbit, then our job is done."
Mr. Murthy, a former leftist who is the first member of his family to go
into business, saw the potential of the software services industry earlier
than most.
He believed that Indian companies could employ Indian computer
engineers -- who speak English and are willing to work for a fraction of
what their American counterparts earn -- to make healthy profits selling
software services to multinational companies.
The first decade was hard. The country still had a centrally planned,
government-dominated economy. It took Mr. Murthy nine months to get
the company's first telephone line and three years to persuade the
bureaucracy to allow Infosys to import its first computers. Whenever
anyone in the company needed to travel abroad, they had to get
permission from a government official.
But in 1991, facing a severe balance of payments crisis, the Indian
government began loosening its hold on the economy. Mr. Murthy's staff
no longer needed permission to travel.
Barriers to importing the latest technology were removed. The
government office that had set the prices on stock offerings at
below-market levels was abolished. In 1993, Infosys went public with a
$10 million valuation, generating the capital for expansion.
Software companies like Infosys have been less hobbled by India's
chronically poor roads, unreliable phone lines and frequent power
outages than other industries. Infosys can ship its products over private
satellite lines. And it has built its own power generators to guarantee a
steady supply of electricity.
The company has taken off in the 1990's, growing at rates that have
ranged from 27 percent to 106 percent a year.
This year its stock seems to scale dizzying new heights daily. It has
climbed past more established companies to become the second or third
most highly valued company on the Bombay stock exchange, depending
on the day, with a market capitalization of more than $7 billion.
In March it became the first Indian company listed on an American stock
exchange, the Nasdaq, where its share price rocketed from $34 to more
than $240, with a market capitalization of about $17 billion.
The company has pioneered changes in the business culture of India,
offering stock options to workers, opening its books to independent
auditors and starting a foundation to help the underprivileged, for
example.
Those moves have built investor confidence and employee loyalty,
enabling Infosys to hang on to talent that has been assiduously courted by
the multinationals that have moved to India. Other companies in the south
Indian triangle of high technology -- Bangalore, Madras and Hyderabad
-- have adopted similar strategies.
The signs of the newly minted yuppie wealth in Bangalore, with a
population of more than five million, are visible in bustling streets lined
with brand-name stores, a profusion of bars where 20-something
programmers go to party and large new apartment complexes decked
out with health clubs, bowling alleys, swimming pools and tennis courts.
Here in India, where the biggest industrial houses have traditionally been
handed down through families like feudal empires, Mr. Murthy founded
Infosys with six men who had been earning about $5,000 a year each
while they worked under him in a Bombay company's software unit.
"Infosys shows that it is possible for middle-class people with no family
heritage of being in business to build a lot of wealth from scratch in one
generation," said Nandan M. Nilekani, 44, who helped found the
company in his 20's and who is now its chief operating officer and
president. "It is creating opportunities for people who thought the only
way to get ahead was to migrate to the United States."
Like young people now thronging the industry, the company's founders
were educated in the huge network of universities and engineering
colleges in India that has produced a pool of technically skilled,
English-speaking workers second only to that of the United States.
While India has neglected primary education, it built first-rate schools in
the 1950's and 1960's like the Indian Institutes of Technology as part of
its striving, as a young nation, for scientific and industrial achievement.
Mr. Murthy earned his master's in electrical engineering at the institute in
Kanpur and has since become a benefactor of the schools.
Many institute graduates still migrate to Silicon Valley in search of
high-paying jobs, but increasingly there are opportunities for them at
home. More than a third of Infosys' 5,000 employees -- whose average
age is 26, as in the industry as whole -- hold stock options, and 125 of
them have become millionaires.
Last year 74,000 people, virtually all of them engineers, applied for
1,500 jobs at the company. Salaries start around $4,000 a year in a
country where per capita income is less than $400 a year.
Mr. Murthy, who makes a salary of $36,000 a year for serving as chief
executive of Infosys, was horrified when asked recently if his children
would inherit the business. "No, no!," he exclaimed. "Absolutely not. I
can stand on any platform and say we run our company in the most
professional manner."
The software industry is growing up not just in south India, but also to the
north in New Delhi and nearby Gurgaon and to the west in Bombay and
Pune. India's software exports have risen from to $2.7 billion last year
from $150 million in 1991, mostly bound for the United States.
There are now more than 600 companies in India that export software
services, employing 280,000 computer engineers, according to the New
Delhi-based industry association, the National Association of Software
and Service Companies.
These young men and women write computer programs for basic
corporate functions: payroll, inventory, billing and sales commissions.
They fix year 2000 problems. And they design systems for electronic
commerce ventures, as well as for the myriad other software applications
of computers in business.
Some of them will strike out on their own. "The bug is biting in
Bangalore," said Ashwin Hegde, 26, a computer engineer at Infosys.
"That's what everybody is thinking about all the time, starting your own
company. There's a lot of money to be made."
While the software industry has provided good jobs, and those workers
in turn have created a demand for housing, restaurants and other services
in Bangalore, the presence of the industry has not done as much as
executives at Infosys would like to broadly improve the city's schools,
roads and health clinics.
"We need to form a stronger link between the software boom and the
benefit to society," said Mr. Nilekani, the president of Infosys. "How
does the city get hard cash to improve itself?"
There is no state income tax in Karnataka. The system for collecting
property taxes in the city is weak, the software executives say. And the
national government levies no income tax on profits from software
exports, a situation that Mr. Murthy says should change.
"In a country like India, which is starved for resources," he said, "I don't
see any justification for tax exemptions for companies which compete
successfully in the global marketplace."
At Infosys' 42-acre campus in Bangalore, Mr. Murthy rushed around
one recent afternoon, overseeing the large-scale expansion of office
space now going up, scribbling his O.K. on every aspect of the
construction.
He is a balding man with dark circles under his eyes whose pants are
pulled up a little high on his waist. At Infosys his word is law. In the men's
room, decorated in malachite green marble, he said the white cabinets
had to go. In the pantry he decreed that there must be a place for the
man who makes the tea to sit down.
On a decorative bracket painted bright yellow, he simply scribbled,
"No!"
For young engineers this new workplace will offer many perks: a
gymnasium and aerobics studio, a meditation room and pool hall, a
jacuzzi and sauna, not to mention beautifully landscaped grounds planted
with trees and flowers.
Immersed in the details of the building project, Mr. Murthy seemed
surprised when asked how he could be so caught up in the aesthetics of
the company's home and so inattentive to his own. Pen raised to sign off
on a soft gray stone tile, he paused to think.
"For too long we have emphasized matters that are personal and familial,"
he said. "I have a fetish. I am extremely fastidious about anything public.
In my personal life, as long as its clean, it's O.K. In this country people
have to start putting the public ahead of the personal good."
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