Infosys Co-Founder, Narayana Murthy: India’s Rising Status as a Tech Superpower

0:00Narayana Murthy:When we started the first year, we were just about US dollars, 40 ,000 in revenue. This year, the company should have a revenue of$20 billion US. Hello, and welcome to Giant Ideas with me, Cameron McLean, and me, Tommy Stadlin. We're co-founders of Giant Ventures, which builds and backs purpose-driven companies. At Giant, we're lucky to meet extraordinary people with Giant Ideas that are changing the world. This podcast brings you behind-the-scenes access to those ideas and the inspiring stories of the people behind them. We explore how one giant idea can kickstart a billion-dollar company, shape culture, and transform life as we know it.

0:42Today on the podcast, we have Narayana Murthy, founder and former CEO of Infosys. He created a$100 billion giant, one of the largest companies in history, which has transformed India's economy. Infosys, founded in 1981, offers consulting, IT, and outsourcing services across the globe. 18 years on from its founding, it became the first ever Indian company to be listed on the NASDAQ. Murthy has been listed among the 12 greatest entrepreneurs of our time by Fortune magazine. He's been described as the father of the Indian IT sector by time. When he speaks in India, huge crowds come to hear what he has to say.

1:18Murthy is also the father-in-law of Rishi Sunak, the former UK Prime Minister. So Murti, thank you so much for joining us on the Giant Ideas Podcast. We're incredibly excited to have you here.

1:28Narayana Murthy:It is a pleasure for me to be talking to your people. I thank you very much for your time. The pleasure is all ours. You've had an amazing life story, Murti. What were circumstances for you and your family like at the very beginning? Well, you know, I was born in 1946. Father was a high school teacher who taught English, physics and mathematics. Mother was a homemaker. We were eight children, five girls and three boys, rather large. When you add my parents and my paternal grandmother to this list, we were 11 living on the salary of a high school teacher. My mother practiced an age-old Indian tradition called Varana.

2:30Narayana Murthy:That is, she would invite a different poorer type than us each day of the week for dinner with us. There were, in effect, 12 mouths to feed every day at dinner. Therefore, we were poor or middle class people. There was no radio, no fan, no furniture, no cycle at all. We sat on the ground and ate our beans. We used to get just one set of new clothes every year at the time of Dipavali, the festival of life. I used to play soccer in my locality since soccer ball was steep those days. and 30 of us friends pooled money to buy it. My father would be transferred from one Mofusil town to another every three years during my school days till we came to the city of Mysore for my high school.

3:46Narayana Murthy:Father was a strict disciplinarian. He taught us to have high aspirations, good values, discipline, and to strive hard to achieve excellence in whatever little we did. He was never satisfied with our performance in the school. Just to give you some data, I got fourth rank in my stage, in my A-level equivalent examination. four out of probably 100 ,000 students. But he simply asked me why I did not get the first rank. That was his reaction. You know, as a revenge, I worked harder and I obtained third rank for the university in my pre-university course. But even then, he was not impressed. My mother taught us kindness, generosity, and compassion.

4:51Narayana Murthy:We had excellent high school and primary school teachers who taught us through their own conduct important values like honesty, transparency, secularism, accountability, hard work, discipline, determination, and most importantly, putting the interest of the community or the society ahead of our personal interest. I did my undergraduate degree in electrical engineering from the University of Mysore in 1967 and my graduate degree in electrical engineering with specialization in computer science from the Indian Institute of Technology in 1969. My first job was at the Indian Institute of Management, Ahmedabad, as the chief systems programmer there.

5:57Narayana Murthy:Then I went off to Paris to work in a French real-time software company. Well, this is a little bit of my background. Incredible. Well, tell us about the very scrappy early days of Infosys. We heard or read that you and your wife started it with just$250. You know, as a student, I was a leftist. I was brought up by my father under the influence of Nehruvian Fabian socialism. I believed that government was the answer to every one of our problems. I was highly impressionable. I was in early 20s. I had been fed the principles of Fabian socialism, which Nehru himself probably learned from Hedalaski in the UK.

6:57Narayana Murthy:But when I went to work in Paris during the early 70s, I was surprised to see prosperity, well-fed people, well-clothed people, good infrastructure, and high-quality trains that ran on time. I got completely confused because they were not practicing socialism. Therefore, I decided to study a little bit about various isms, socialism, capitalism, communism, and libertarianism. I discussed with various experts on these isms at Sorbom, and in fact, I met a few leaders of these isms, including George Marseille, who was then the head of the French Communist Party. I was not very impressed. And I realized that the answer to India's prosperity lay only in entrepreneurship in a free market environment and consequently in capitalism.

8:19Narayana Murthy:That's why I returned to India and conducted an experiment in entrepreneurship. Now that's how Infosys was I invited six bright and value-based anger colleagues of mine who were five to six levels below me in corporate hierarchy at a firm in Mumbai to join me in the emphasis experiment. A couple of them did not even have the small amount required for their equity. In order not to embarrass them, I decided that every one of us would take a loan from my wife, who had a very good job as an engineer in a company. She was the lender of first resort. Absolutely. Absolutely. We repaid the loan to my wife in a couple of years.

9:21Narayana Murthy:Entrepreneurship those days was very difficult in India. There was no venture capital system. The banks did not understand software development. And they wanted a physical collateral for even working capital. Therefore, they would not lend to a software company. The import of computers was controlled by the government to support a government company that was manufacturing a kind of digital computer. It took 50 trips to Delhi to obtain a license. 50? 50. Obtaining a phone connection took four to five years. There was no current account convertibility. You had to apply to the central bank or the Reserve Bank of India and wait for 15 to 20 days to obtain a currency to travel abroad, even for two or three days.

10:35Narayana Murthy:I can go on and on and on. And Merti, just to ask you about that, do you think that that enormous friction to getting going where you're facing, you know, 50 trips to go get this export license? Oh, yeah. Was it a good thing, though, in some ways that I guess it really forced you to want to do this so badly and to forge ahead? I guess startup entrepreneurs now have it so easy by comparison with cloud and all the tools in a box ready to go and kind of none of that regulatory burden. But in some kind of perverse way, was it helpful in some way? What I realized is that the primary motive engine for entrepreneurs is passion.

11:16Narayana Murthy:It is this passion of entrepreneurs that makes them see what appears impossible to most others as a plausible impossibility. Something that we should go after. So anyway, God was kind and we managed to overcome all those problems. And here I am sitting with you. The original Infosys was a database idea of sorts. Yeah, yeah. Once the market opportunity exploded in the US, there was a serious shortage of talent to develop these OLTP-based commercial applications in the US. That is where India came into the picture. In India, there was large unemployment even for bright engineers, except those who went away to the US, UK, Canada, Australia, whatever it is, for higher studies.

12:20Narayana Murthy:I realized that if these engineers are well trained, these bright engineers would be able to form a very sound supply chain at globally competitive salaries to satisfy the rejoining demand for software development in the U.S. That is how we match the market demand with adequate supply. And I claim a little bit of credit for this. Give us a sense of the scale now, Murti. You've come a long way from learning a computer from the Indian government and borrowing$250 from your wife. When we started the first year, we were just about US dollars, 40 ,000 in revenue. Today, this year, the company should have a revenue of$20 billion US.

13:25Narayana Murthy:Wow. It should have an after-tax income or as we call the net income, that's what they say in the US, of approximately about$3.5 to$3.6 billion. And a market capitalization of probably about$75 billion. But that's a huge difference in scale. Amazing. Murthy, let's talk a little bit about the intensity required to build a company like that. We're recording this in London, and there's a big debate raging both in Europe and the US about startup culture. So, you know, this idea of startups in China doing the 996, where they're doing 9am to 9pm, six days a week. You've talked about the need to work 70 hours a week for India to really compete on the global stage.

14:23Infosys has interestingly put into place alerts for employees when they go beyond about nine hours a day in an effort to perhaps address some of the kind of unsustainable working practices and burnout. Where do you stand today on this topic?

14:40Narayana Murthy:Well, you know, I retired from Infosys in 2014. It's now 11 years. I have not seen any individual, any corporation, any community or even any country succeed without high aspiration, good values, a little bit of smartness, lots of hard work, high productivity. discipline and determination. Even extremely smart globally respected academicians tell me that hard work is a must for them to succeed in today's highly competitive world. I used to be in the office at 6.20 a.m. every morning, and I used to leave office for home at 8.30 p.m. during my 33 years of tenure at Infosys. I used to work six days a week.

15:57Narayana Murthy:Sometimes I used to work half a day, even on Sundays. That's already 90 hours a week. And my own smile, my own conclusion is that both Infosys and I have benefited much from it. And therefore, I have absolutely no regrets. Fantastic. I think that's necessary for most founders, I would say, to work very hard. Let's go back to entrepreneurship within India's role on the global stage. I thought it was really interesting earlier when you were talking about your initial idea for Infosys, not just being about building a company, but also about the role of entrepreneurship required and capitalism to build an innovation economy in India to grow.

16:41So what role do you think entrepreneurship has in building a modern India?

16:47Narayana Murthy:Entrepreneurs operating in a free market environment, And satisfying the customer by creating a differentiated business value with the competitors. They do several things. One, they create jobs for a large number of qualified people. Second, they create wealth for these employees either through employee stock options or through good compensation including bonuses. They create wealth for investors. And most importantly, they pay taxes to the government so that the government can use this tax money for solving the problems of public governance system, alleviating poverty, creating infrastructure and making the lives of the citizens better.

18:12Therefore, I am completely convinced that countries that aim to solve the problem of poverty will have to necessarily embrace compassionate capitalism

18:30Narayana Murthy:and provide full support to entrepreneurs to create these jobs, these wealth, and to pay taxes. There is no other option. Murthy, where do you stand on the optimism levels on India's potential over the next decade? Are you excited about where India stands today, particularly within the innovation economy? Well, you know, you people know that India is a peaceful democracy akin to most Western developed nations. I can understand why the Western countries have a better appreciation for India's economic progress. even though it may not be as stunning as the Chinese progress in alleviating the poverty.

19:36Narayana Murthy:Because in a democracy, there are multiple streams of thought, multiple opinions, multiple views. and to make progress amidst this diversity of opinions. It takes time. Now, having said that, entrepreneurship in India has become popular due to encouragement provided by our higher educational institutions, by our governments supporting venture capital and angel investment institutions, through tax breaks and ease of doing business. And the flow of some of the venture money that was intended for China, Europe, and U.S. has come to India. In the curriculum, from primary schools to higher educational institutions, Today at business schools, more than 30 % of the students want to become entrepreneurs.

20:47That's amazing.

20:48Narayana Murthy:In business schools, it's somewhere around 25%. These entrepreneurs are working on inexpensive drones. They're working on cheaper water, cleaner air, space vehicles, defense products, inexpensive electric vehicles. cheaper pain-free blood sugar and other human body parameter measurement products, delivery of groceries and food items, better agricultural productivity, and online education. I've just taken a few examples. I go to several higher educational institutions every year for delivering the commencement address as it is called in the US or the convocation address as it is called in India.

21:40Narayana Murthy:I see considerable enthusiasm to use entrepreneurship to solve some of India's problems. In your book, A Better India, A Better World, Murthy, you talk about 51 % of Indian children being undernourished, despite having one of the highest GDP growth rates in the world. To put one of your own questions back to you, what do you think it will take for India to bridge this great divide? Well, you know, first of all, that speech you saw in my book was delivered probably around 2004 or 2005 because the book itself was published in 2009. The situation for undernourished children has improved a lot in the last 20 years.

22:32Narayana Murthy:Being the country with the largest population in the world today, it is not a surprise that we have the highest number of undernourished children in sheer numbers. As a percentage, it may not be, but certainly in I accept that. It is also undeniable that we have to eradicate poverty, illiteracy and underlourishment. We have a lot of work to do in public health, in providing nutritious food to rural children and in creating jobs in rural India. You know, in some way, we have to be open-minded. We have to learn from countries that have performed better than us. We have to create an environment of meritocracy.

23:32Narayana Murthy:We have to improve our problem-solving capabilities. we have to welcome lots of foreign investment and create enough infrastructure so that that foreign investment and the Indian investment can create jobs in rural India. So these are all things that need to be done. But as you people know, in a democracy, everything takes time. What is your hope for the future of India, Murthy? Well, you know, that's a very good question. My hope for the future is that I want an India where the poorest child in the remotest village has decent access to nutrition, to healthcare, to education, to shelter, and most importantly, has confidence that its own progeny will lead a better quality of life than itself.

24:56Narayana Murthy:If we Indians can reach that goal, to me, that is an equitable and appreciable economic progress. Fantastic. Murti, I'm going to ask you a few quickfire questions about yourself, your own characteristics, your very successful family as well. So let me start by asking, what is it about yourself that has allowed you to achieve this extraordinary success of building Infosys from scratch into a$80 billion company? I am an average Indian brought up by value-based parents who themselves had very high aspirations and also by first class early teachers with good values. My story, therefore, is about high aspiration.

26:00Narayana Murthy:It is about being open-minded to employ people smarter than myself. It is about learning from competitors and others who have performed better than me. It is about average smartness, which I believe I am. It is about lots of hard work. It's about lots of discipline, lots of determination. and ability to learn from your critics. And of course, from your parents, your teachers and bosses and respect them for their view. And finally, to show some concern for the society. That's how I would sum up myself. Lovely. It's funny how many of our guests have had a teacher really change their life. You have an unusually successful family though, Murti.

26:58You have created Infosys from scratch. Your son-in-law, Rishi Sunak, obviously went on to become the Prime Minister of Great Britain, where we're recording this from. What did you see in him that allowed him to go on and have that success?

27:11Narayana Murthy:You know, I think in some way he embodies the values that I spoke about, which is high aspiration, which is working hard, which is trying to be at the top in the school, in the university, both at the undergraduate level and graduate level. It is about an intense desire to serve the country. It is about conducting oneself, self, legally and ethically in every context. It is about putting the interests of the country ahead of one's personal interest. And I think these are the things that I see in him. And that's what my wife and I have been teaching our children, both my daughter and my son, who himself has a very high-quality PhD in computer science from Harvard.

28:23Narayana Murthy:He was at MIT, all good institutions. But we have told them that the most important thing is value. Though a professional is known by his or her competence and his or her values, competence without values has no real impact on your context. To value-driven, humble, but in the pursuit of excellence. That's what I'm hearing, Murthy. You know, I am often reminded of what Winston Churchill once said about Attlee. What did he say? One of Winston's friends told Winston, you know, Attlee is a very humble man. Winston, as he was prone to saying, he said, remember that he has a lot to be humble about. Very good.

29:31Murthy, do you think that for Rishi Sunak, seeing how successful you had been almost made it possible to dream about soaring so high to become prime minister? Do you think seeing you as a role model really helped him with that ambition?

29:47Narayana Murthy:Well, I think in some way it is all about high aspirations. It is all about living in an environment where the parents teach you good values, where the parents exhort you to reach higher and higher, where excellence is revered, where societal interests are considered extremely important. and definitely in a situation where there is societal interest and your own personal interest, personal interest always takes a backseat. I think that is what I believe will help all of us to reach better and better positions and add value to the society. At the end of the day, as I've often said in my own company, respect from the society is the most important attribute that you should seek for.

31:12Narayana Murthy:because when we decided to frame the vision for our company Infosys in May 1981, I called the six younger people to my house. It's a small one-bedroom flat in Mumbai. And I asked them, what do you want it to be? What's your vision, for instance? One fellow said, I want it to be the largest company. Another fellow said, I want it to be most profitable. Third fellow said, I want it to be, to have the highest market capitalization. And as my style was, I was the last one to say. And I said, I want it to be the most respected company in India. They were a little bit surprised. How will this help? I said, it's very simple.

32:07So, if you satisfy your customers by delivering whatever you promised on time within budget

32:19Narayana Murthy:and exceeding quality, you will earn their trust. And by earning their trust, their respect for you will keep on increasing. If you earn respect from your employees, they will become your brand ambassadors to bring better and better quality employees to the company. If you earn respect from investors, they will remain long term investors and they would become your ambassadors in the stock market. if you earn respect from the vendor partners they will put up with you in the days of your difficulty and most importantly if you earn respect from the government they will appreciate what you are doing to the society and they will create policies that are conducive to your growth And more above all of this, you have to earn respect from the society because society contributes customers.

33:33Narayana Murthy:Society contributes employees. Society contributes investors. Society contributes politicians and bureaucrats. And therefore, society is the most important constituency that you should seek respect from. And in taking every decision in the company, you have to simply ask the question, will this enhance respect for Infosys and for me in the eyes of the society? Murti, you live in the same modest house that you've lived in for decades now. We also heard a story that you reportedly still fly economy class. Is that true? Yes. You know, one thing that I have been practicing is leading by example. That's what I learned from Mahatma Gandhi, who in my lexicon, with the finest leader India has produced, maybe the world has produced.

34:44Narayana Murthy:That's a thought. Different people have different points of view. I'm not going to pick a quarrel with them. Now, Mahatma Gandhi demonstrated the power of leading by example. The power of practicing the precepts rather than giving big lectures. You know, he used to travel by third laws in his aspiration towards India's independence. At every station, thousands of people would want to come and see him and touch him. So his compatriots would travel with him in plain clothes and make sure that food was not poisoned and that he is not injured and all of that. One of his compatriots, she said, it takes a fortune to keep this man in poverty.