Infosys Technologies Limited (NASDAQ: INFY) is a world leader in providing IT consulting and software services to the finest global organizations. Infosys offers offshore based software services such as application development, software maintenance, Internet consulting, and establishing software centers for their customers. Infosys’s solutions focus on addressing business challenges across different horizontal applications and target vertical industries.
Through the worldwide sales headquarters in Fremont, California, US, and 35 other sales offices located in North America, Europe, Australia, UAE and 8 development centers located through out India, Infosys capitalizes on time zone differences to create a 24 hour workday.
During the fiscal year ended on March 31, 2006, Infosys cocked revenues of 2.152 Billion USD and had a net income of 555 Million USD. Infosys derived 65% of revenues from North America and 25% from Europe. Infosys has ongoing contracts with more than 350 major companies for software development and maintenance. These contracts are executed with both onsite and offshore personnel.
I have come across the following interesting article about Infosys Technologies, with interesting facts and figures.
On July 2, 2006, Infosys technologies will turn 25. That’s not a significant age for a company; several Indian companies are older. In these 25 years, however, Infosys has set new standards in governance and wealth creation (both for employee and shareholders) and turned an entire industry on its head (global delivery as opposed to offshoring). Despite the rash of publicity the company receives, however, there are still things about it that are little-known. Here are 25 such.
1. Infosys wasn’t N.R. Narayana murthy’s first entrepreneurial venture. That would have to be a company called Softronics, an IT consulting firm that Murthy founded in Pune in 1976. He wound it up (when he realised that focusing on the domestic market wouldn’t take the firm anywhere) and signed up to head Patni’s software business.
2. Murthy is employee # 4, not employee number # 1 at Infosys. Although he resigned on December 29, 1980, the day he decided to start Infosys, Murthy did not join Infosys, which was incorporated on July 2, 1981, until 18, March 1982. He had promised Ashok Patni that he would complete two projects and it took him that long to do that. “I must have served the longest notice period in the history of corporate India,” laughs Murthy. P.S: N.S. Raghavan was employee # 1
P.P.S: Infosys doesn’t repeat employee numbers; today, the number for fresh employees in the software business is well into the 60,000s.
3. Nandan Nilekani decided to become an entrepreneur a few days before his marriage. Nilekani was to get married in the first week of January, 1981. In late December 1980, when Murthy and Raghavan told him of their plan to quit and start a company he cast in his lot with them.
4. Infosys has seven founders, not six. The names of the six are well known: apart from the three mentioned above, S. ‘Kris’ Gopalakrishnan, S.D. Shibulal, and K. Dinesh. The seventh was Ashok Arora. However, he left in 1989, in what would later become the company’s first major ‘point of inflection’.
5. Infosys didn’t have a computer in its first two years of existence. Even as the company waited for permission to import a computer it started operations as a body shopper in the true sense of the word. The computer came later, and the global delivery model much later, although, documents show that the company had started speaking of this trend as way back as in 1993.
6. Murthy was (and could well be) one of the best software engineers ever produced by India. At least two of Infosys’ early recruits-both have left the company now; one runs a software products firm, and the other is a consultant- speak highly of Murthy’s technical capabilities, something that is all but forgotten today by most people. “As long as computers continue to be based on the Von Neumann architecture,” says D.N. Prahlad, Founder and Managing Director, Surya Software Systems, and a former Infosys employee (he left in mid-1998 when he was heading one of the company’s business units), “Murthy will probably be on top of systems and software.”
7. Sharad Hegde was Infosys’ first non-founder employee. A former Patni employee, Hegde was Infosys’ tech-guru in its early years. He left the company only in the early 2000s and is currently working on setting up a golf resort near Bangalore. His wife, Anu, who left the company in the early 1990s, was an expert in quality and processes. The two met in Infosys and were Infosys’ first ‘office romance’.
8. Infosys’ early recipe for success would now be considered a radical innovation in the software industry: zero-defect code. Murthy, one early employee recalls, was obsessed with zero-defect code. Even today, the accepted way to code is to write software, then debug it. Murthy would have none of that. In the company’s early years, Murthy and Dinesh and Shibulal and Kris taught recruits how to write code without errors.
9. One of Infosys’ early go-to-market vehicles was a joint venture with ksa, ksa-Infosys. And Kris, who spent much of the 1980s in the US, was Infosys’ face in the jv. The joint venture collapsed in 1989.
10. Infosys almost wound up in 1989. “Our peers had cars and houses,” recalls Kris referring to one reason for what he calls “a major introspection” that happened in 1989. “And we had nothing.” “The JV with KSA collapsed in that year,” remembers Dinesh. Arora, too, decided to leave that year. Murthy asked his co-founders whether they wanted out. They did. He offered to buy them out. “At which point,” says Dinesh, we said, ‘We thought you wanted out too’.” They decided to stick it out.
11. Most people attribute Infosys’ success to its superior planning process. Well, this started in 1989. “It wasn’t anywhere near as sophisticated as what we do now,” says Nandan, “but it started then.” The first plan gave the founders who had just come off a gut-wrenching discussion on whether to wind up or not, several immediate objectives. The first was the decision to build a campus (… “and spend more on it than our turnover then,” says Murthy). The second was the decision to make an initial public offering.
12. Manmohan Singh facilitated Infosys’ IPO. Infosys wanted to issue its shares at a premium. Until the early 1990s, issue-pricing was decided by the Controller of Capital Issues. The CCI decided that Infosys could make an issue at a premium of Re 1 (issue price: Rs 11). The company demurred. Then, Singh abolished the post of CCI in the first wave of economic reforms and Infosys went ahead with an issue (in February 1993) at a premium of Rs 86 (issue price: Rs 96).
13. The market may love Infosys today, but most brokers thought the company was just another fly-by-night operator in the 1990s. A consultant involved in the IPO remembers that when he spoke to a few brokers in Mumbai about the issue, the unanimous response was that since an unknown company was trying to make an IPO at a premium “its promoters were certain to be thieves.” “I knew things had changed when a few months after the issue, one of those same brokers called me up and asked whether I could arrange a meeting for him with the promoters.”
14. Infosys’ promoters are rich today because of a decision they took early in the company’s existence. “We decided that we would pay dividends from day one, pay taxes on the dividend we received, and re-invest the entire sum as equity in the business,” says Murthy.
15. The Infosys IPO almost devolved. Murthy claims that the issue was subscribed 1.06 times, and it was, but fact is, it almost didn’t go through. Eventually Vallabh Bhansali’s Enam Financial Consultants, the lead manager (along with SBI Capital Markets), had to push it through.
16. Nilekani’s quiz-club members struck it rich. Well, some of them did. Nilekani was a quizzer in college and was part of an informal group that would meet and quiz in Bangalore. One member remembers that Nilekani came to a meeting with a battered attache case, pulled out some IPO forms, and tried to interest them in the offering. “I did invest in Infosys,” says the man, “and never had cause to regret it.” Nilekani also remembers visiting some of his IIT batchmates working in Mumbai “with the same battered attache case” and trying to interest them in some shares.
17. If there’s a photographic history of the early years of Infosys, Shibulal is the man to thank for that. “I was always interested in photography,” says Shibulal, Director and Head, Worldwide Customer Sales & Delivery, “and in collecting photographs.” For some time in the 1990s, Shibu, as he is known within the company, left Infosys to work for Sun Microsystems in the US. The official version is that he did that to acquire some perspective on how a large technology company works and that it was always clear that he would return to Infosys.
18. Nilekani may be CEO today and Kris coo, but the latter was actually senior to the former at one point in time. Nilekani, most Infoscions and Exfoscions agree, was always the big-picture man at the company. “It was Kris himself who suggested in the 1990s that Nandan could be given a larger role and that he wouldn’t have a problem with it,” says Murthy.
19. The real reason for the GE-business falling through in 1994: Murthy wanted the Indian software industry to stick to its guns; it didn’t. In 1994, Infosys said it would no longer be doing work for GE, thereby closing the door on a business that then accounted for almost a third of its revenues. The reason had to do with GE’s decision to ask for a reduction in billing rates. Murthy met with the heads of the other major Indian software firms then working for GE and suggested that if they all refused to work on the lower rate, the company would have no option but to give them a fair deal. The CEO of one company didn’t agree and Infosys ended up being the only company to opt out of doing business for GE.
20. Infosys has reason to remember Nordstrom fondly: the retailer agreed to what was then a record billing-rate. The first major customer Infosys signed on after refusing the GE business was Nordstrom, and at a far higher billing-rate. Not surprisingly, one of Nordstrom’s senior executives was a honoured guest when Infosys showcased its Electronics City campus to the world in 1994. One individual present on the occasion remembers that the CEO of a large rival software firm based in Bangalore and his deputy were keen to meet with the man, but that Phaneesh Murthy, the man who had signed the deal for Infosys, kept them at bay.
21. Mohandas Pai works for Infosys because he asked difficult questions at a shareholder meeting. Give me any annual report and I can analyse it threadbare in minutes,” says Pai, who, at the time he posed the questions, was working at Prakash Leasing, Bangalore. Murthy and Nilekani decided that Pai would be a good resource; he signed on as a consultant initially. P.S: Pai has been reading annual reports since the age of 15.
22. Most people in Infosys saw Phaneesh as Murthy’s successor in the late 1990s and the early 2000s. Murthy, most Infoscions (as employees are known; former employees are called Exfoscions) admit, was inordinately fond of Pai and Phaneesh simply because he thought their performance extraordinary. Given Phaneesh’s age (he is now 44) and his profile (he was head of sales and was responsible for helping the company grow from a $10 million one to a $700 million one between 1992 and 2002) most people within the company saw him as Murthy’s successor. Then, the sexual harassment suit (circa 2002, when a former Infosys employee in the us, Reka Maximovitch, alleged that she had been harassed by Phaneesh) happened, and Phaneesh had to leave the company.
23. Infosys picked Nations Banc Montgomery Securities as lead manager for its 1999 NASDAQ listing because … The firm, one individual in the know claims, was the only one of around 10 i-banks that pitched for the business to acknowledge that the company’s services-play was a good thing. All the others harped on the importance of products.
24. Surprise: Infosys itself thought it would have to necessarily have a product play. For much of the 1990s Infosys projected that between 30 per cent and 40 per cent of its revenues would come from products.
25. The NASDAQ issue almost didn’t happen. Everyone was working hard in the run-up to Infosys’ IPO on nasdaq and two departments (one of which was Pai’s finance) squabbled over something. Murthy was willing to call off the issue if it meant this would be the impact of growth and success on the company’s culture. Pai admits that “… around the time of the IPO, there was an event where Murthy had to choose between me and the company and he chose the company.”