Before Infosys began in 1981, a corporate trainer told me that a group of engineers was seeking a loan to start a company and asked whether I could meet them to see if they were worth it. I met the group which was to become the founders of Infosys and was impressed. I remember advising the trainer to give them the loan but half as loan and half as equity. Seventeen years later, this company became one of the most promising entities in the Indian software sector, one that other companies looked at with respect and seriousness. We at HCL were a major hardware supplier to the company and I inaugurated the first server which connected Infosys to GE through satellite then.
For a new company in the IT sector, we found Infosys’s working and focus a little strange. HCL, like other global IT giants, focused on product development, which was considered ‘real’ work. Infosys focused on application development. They realised fast that sticky revenue came from maintenance, and almost 40 per cent of their revenue came from there. Yet, Infosys made good margins and had a great EBIDTA (earnings before interest, taxes, depreciation and amortisation). From a productivity point of view, that was great.
Infosys was different in other ways as well. We, like other big companies, went to the top 24 colleges—all IITs and RECS—to recruit freshers as we wanted computer engineers for real development work. Infosys, on the other hand, went to other colleges and picked up huge volumes from there, though they did recruit a few from the iits. They always recruited in much higher numbers; their staff strength too was also much higher than ours. But Infosys was always attractive for its employees because even at that stage of the industry, they gave everyone stock options. Although few at that time really understood what stock options meant, it made Infosys extremely attractive for new recruits because unlike other companies which gave stock options only to a few, Infosys showed real wealth to a lot of people in the company.
It also kept a relatively low profile in the media and had good numbers to show the people. In fact, before it went public, little was known about the company and its people. And with Narayana Murthy at the top, it was a great showcase company.
What was also great about Infosys was that they were never aggressive. They built up a solid process and made sure that their delivery was immaculate and relationships with their clients was strong. And the top team of founders, all computer engineers, was a dedicated one, extremely passionate about what they were doing. This was also the time that the Y2K phenomenon was coming up and all companies were becoming aggressive. This allowed Infosys to map out a company’s application portfolio and prepare itself for the future. And it was one job they did pretty well.
As told to Arindam Mukherjee
Arjun Malhotra is one of the founders of HCL and now chairman, Headstrong Genpact.
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