India: the Infosys revolution


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Thirty years ago, a young engineer founded with a few colleagues, in Bangalore, a software company that would become one of the world giants of computing. Narayana Murthy retired last year as Infosys president. He returns to the elements of an inseparable success of the transformations of contemporary India.

The story of Infosys is closely linked to that of India, its evolution and its reforms, but it is part of a global environment. In 1981, when Narayana Murthy founded the company with a handful of friends and a few rupees, it was after four major events since 1976. In the United States, first of all, India had, in computer science, decoupling between hardware and software, following a decision by President Ford. This meant that software manufacturers could now sell “software packages” installed on machines sold by hardware manufacturers. While until then, hardware manufacturers only sold their home-made software to equip only their own computers. Second event, the appearance of computers both very powerful and inexpensive. Then, online transaction processing software became available on microcomputers, a major evolution for online business applications. The fourth factor, decisive, was purely Indian: a very large number of qualified engineers, of quality and without work. The combination of the explosion of the IT services market in the United States and this available reservoir of high-quality labour has led to the birth and rapid growth of Infosys.

Most important, in a way, is having reassured millions of private entrepreneurs about their ability to succeed, their ability to serve the global market and its most sophisticated clients from India. But success of Infosys was also a message about the practices: we were the proof that it was possible to make profits while managing a company in a legal and ethical way, even if the environment was not optimal on this point. It is a key element of our corporate identity: Infosys always, when it was necessary, chose ethics against growth. In the same vein, we have shown that in India too, we can implement the best governance practices within the company.

Narayana Murthy had thus contributed to setting new standards in line with the practices of our American customers and more generally global companies. And these practices have spread little by little in India. It is a factor of competitiveness: an Indian company based in India can now “benchmark” at the level of the best global companies.

What an in-house company does can have an external impact on its social environment. For example, Infosys innovated in the motivation of the teams, by launching a vast plan of stock options. The challenge? For Infosys, the first challenge was to motivate the troops, but their plan also had the effect of democratizing the creation of value on a scale never before practiced in the country. Infosys gave 35% of the company’s capital to its employees. With a market capitalization of $ 30 billion, they then had  about $ 11 billion. Companies like Infosys had thus contributed to the emergence of a middle class in India. The idea of profit sharing had come a long way, and it’s all due to Narayana Murthy.


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