Interview Questions

Full Interview with N.R. Narayana Murthy

N.R. Narayana Murthy:

The role of IT in any society is three-fold. One, to make corporations more efficient and effective and help them compete on a global scale. Second, to make governments more responsible, responsive and accountable, since they play such a huge role in our lives. And finally, to make the lives of people better, more so in a country like India where a majority are poor. They need to get the best value for whatever little money they have. In all these areas, developing countries are far behind the developed nations.

Apart from increasing efficiency, the role of IT within Infosys is to make the organization person-independent and to improve our competencies in virtual team operations, since our business depends on virtual teams with members spread across the globe.

 

N.R. Narayana Murthy:

Clearly, the record of IT companies and IT implementations is not very good. All across the world, we see a significant number of projects running into cost and time overruns because of quality or productivity problems, or as a fallout of trying to solve the wrong problems. The primary issue is one of enhancing the completion rate of projects on time, within budgeted costs and of the requisite quality. If we can ensure that, we can then claim that IT delivers.

N.R. Narayana Murthy:

First, IT managers need to prioritize applications in terms of value for money. Second, they need to learn to implement systems. The failure rate of information systems in the government is pretty high, because users do not take ownership. The success of the system is not just the responsibility of the vendor, it depends on the users as well. The corporate world too, in India, doesn't seem to realize that they too have a certain responsibility after a vendor is hired. When it becomes a team task and both have a stake in the success of the project, failure rates will go down.

N.R. Narayana Murthy:

Today, IT is as critical for enterprises as breathing is for humans. In any case, scaling up is not possible without good systems. This means that even if a market exists and even if an organization has the people and raw materials, it won't be able to succeed. And, as the complexity of the organization increases, there is no other way of managing it without IT.

This has to be realized at the highest levels of management.

Also, CXOs shouldn't feel that that because they have a CIO, the responsibility for the success of the information systems lies with him or her. CXOs have to understand that they are part of the solution. They have to take ownership of IS as well.

 

N.R. Narayana Murthy:

At Infosys, we have always tried to be pioneers. If you run a race, and lead it, you have the whole horizon in front of you and can decide where to go. However, if say you're second, you're seeing the back of the leader. You don't know what lies ahead.

 

Being the leader brings with it the possibility of failure. But the probability of failure decreases as you keep improving the fitness of the organization in terms of evaluating technologies, producing proper project plans, monitoring progress and 'owning' the solution. I believe in being the leader everytime.

 

N.R. Narayana Murthy:

Traditionally, IT came under the finance department. It's only over the last 20 years that CIOs have emerged. Slowly, they're getting recognition. Several companies have also put CIOs on the board. Once the CIO community takes it as their charter to become the frontrunners, responsible for the success of their organizations, we'll automatically see a change.

 

Ideally, a CIO is a great person to lead an organization and is in an extraordinary position to do so. The reason is quite simple. I can't imagine anybody having a better handle on the health and progress of an organization than the CIO.

 

There is however a drawback in the career CIO: He is someone who has risen through IS ranks and who has reveled in the warm embryo of the organization and has also not faced the reality of the outside world. It might be difficult for such a person to handle other responsibilities as well.

 

It's simply wonderful to have someone who had been head of sales, been involved with production, and gone on to be CIO. The lesson for organizations is to look for people with a range of experience when they choose CIOs.

 

N.R. Narayana Murthy:

At Infosys we've come up with the concept of 'modular outsourcing'. What this entails is that a company like ours may not take up end-to-end outsourcing (which involves taking over the data centers or all the people). Instead, what gets taken over is software, which is our strength and offers the client better value for money. We've done this in several cases outside India. As Geoffrey Moore, the guru of the concept of 'core and the context', says, organizations need to outsource the context and in-source or keep the core. The core is essentially all that gives strategic, competitive advantage in a direct manner.

The other way to look at outsourcing is to consider the theories of Ronald H. Coase, a Nobel Laureate in Economics. Coase said that when the cost of a transaction in the marketplace becomes lower than the cost of the transaction in-house, then, like it or not, you have to outsource. Otherwise you won't be able to compete. This is a good algorithm to determine what should be outsourced.

 

N.R. Narayana Murthy:

In 1984, when we were bidding for a project in a very well-known apparel company in the US, the CIO asked me why should they give the project to Infosys and not do it in-house. I replied that the difference between doing it in-house and outsourcing lay in the following: If the project failed, his organization would not close down, though there was a danger of mine shutting shop, since all it would take was one negative remark from him about Infosys to other CIOs.

 

The criterion that Indian CIOs must look for in companies that they outsource to are economies of scale, efficiencies, ideas and innovation. That and value for money should be the determinant and not how cheap or expensive outsourcing works out.

As economists define them, price is what you pay, value is what you get.

 

As long as a CIO remains focused on deriving value for money, he'll come out a winner. CIOs should look at an equation where value/price equals much more than one. And, to do that they have to model the value, since value is more than mere benefit. In this scenario, when one talks of benefit, one implicitly holds the vendors 100 percent responsible for it. With value, CIOs bring themselves into the picture as well. For instance, when a new system is installed, and a CIO reengineers the thinking or the mindset of the users, then the organization derives better value.

 

N.R. Narayana Murthy:

Scalability is the biggest challenge that we face. The software services industry has somewhat of a linear relationship between revenues and the number of people employed. That's why scalability becomes even more crucial for growth and profitability. Scalability is primarily handled by technological investments, physical investments and by basically enhancing the energy, enthusiasm, aspirations and confidence of people. The last one is tackled by leadership; by creating more and more leaders who can communicate a uniform message of vision, hope and the future. They walk the talk and thus have high credibility.

 

But speed, imagination and excellence in execution come into direct play in the area of technological and physical infrastructure. For instance, when we put up Building No. 1 (the Heritage Building) in the Bangalore campus, it took us 14 months to create

70,000 sq.ft. of workspace. Now, we're able to complete 250,000 sq.ft. of office space in just six months. Similarly, we used to take a month to populate 600 nodes with desktops,

laptops and servers and the associated software. Today it takes us three to four days to do the same for 250,000 nodes.

 

In 1994, we could train about 300 people a year. By end-2006, Infosys will have the capacity to train 45,000 a year. Imagination is all about good ideas, for instance, of communicating effectively to large groups, by training the trainers better and using technology in the form of e-learning to convert what was a synchronous process into one that is asynchronous.

 

N.R. Narayana Murthy:

In 1989, we took a decision to operate only in the packaged software area in India. However, over the past few years we did a re-think and have bid for pojects within India. But, I find that Indian IT companies, even the larger ones, compete so severely on price, that it makes it very tough. For instance, two years ago we bid when a big Indian media house wanted to implement leading-edge information systems. So did two of our competitors. One quoted a tenth of our bid and the other 30 percent of it. Because we wanted to do the project, we were willing to forego another 10 percent. Though the lowest bid was eliminated, the other IT company was willing to go 20 percent lower than their earlier quote. I don't want to comment further on what happened. That's the reason for our reticence to compete for projects in India. Fortunately, this is not the case with our banking product. Since organizations have evaluated it and get an immediate solution, they are willing to pay a decent sum for it.