NARAYANA MURTHY AND INFOSYS
INTRODUCTION
THE STRATEGIST
PEOPLE MANAGEMENT
CORPORATE GOVERNANCE AND INFOSYS
Analysts felt that Infosys became one of the most respected companies in India,
through its corporate governance practices, which were better than those of
many other companies in India. Narayana Murthy's move to adhere to the best
global practices was driven by his vision to become a global player. Infosys
adopted the stringent US Generally Accepted Accounting Practices (GAAP) many
years before other companies in India did. Infosys' corporate governance
practices conformed to the recommendations of the Confederation of Indian
Industries (CII) committee and the Cadbury committee[1] on corporate governance
with a few exceptions. To maintain transparency, Infosys provided details on
high and low monthly averages of share prices in all the stock exchanges on
which the company's shares were listed. It was one of the few companies in
India to provide segment wise breakup of revenues.
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Narayana Murthy believed in commitment to values, and ethical conduct of
business. He said, "Investors, customers, employees and vendors have all become
more discerning, and are demanding greater transparency and fairness in all
dealings[2]." He also made a clear distinction between personal and corporate
funds. Founding members took only salaries and dividends and did not have other
benefits from the company.
Infosys received was the recipient of awards for its good governance practices.
In 2001, Infosys was rated India's most respected company by Business World
[3]. Infosys was also ranked second in corporate governance among 495 emerging
companies, in a survey conducted by Credit Lyonnais Securities Asia (CLSA)
Emerging Markets. In 2000, Infosys was awarded the "National Award for
Excellence in Corporate Governance" by the Government of India. |
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LEADERS IN THE MAKING
In August 2001, Narayana Murthy set up a Leadership
Institute in Mysore, India, to manage the future growth of Infosys. The
institute aimed at preparing Infosys employees to face the complexities of a
rapidly changing marketplace and to bring about a change in work culture by
instilling leadership qualities.
Commenting on the institute, Narayana Murthy said, "It is our vision at Infosys,
to create world-class leaders who will be at the forefront of business and
technology in today's competitive marketplace. …We believe the Leadership
Institute will play an instrumental role in equipping Infoscions to be leaders,
contributing to the advancement of the IT industry[4]."
Narayana Murthy expected Infosys revenues to touch around Rs.500 billion (US$12
billion)[5] by 2008-09. Analysts felt that the two factors responsible for the
success of Infosys were Speed and Imagination. (Refer Exhibit II). Narayana
Murthy agreed, "Without these, we would be wiped out as fast as dew on a sunny
morning. Actually, we have a fetish for excellence."
QUESTIONS FOR DISCUSSION:
1. "Infosys is one of the world's top providers of software consulting, from applications development to maintenance." How did Narayana Murthy build one of
the biggest IT companies in India?
2. "Narayana Murthy has always believed that human resources are the greatest asset of a company." Briefly describe the HR policies of Infosys.
ADDITIONAL READINGS & REFERENCES:
1.The maker of millionnaries, Businessworld, January 3, 2000.
2.The man who saw tommorrow, and pursued it relentlessly, Business Standard, January 4, 2000.
3.Naik Chandrika, Narayana Murthy founded Infosys with wife Sudha's savings,www.expressindia.com, April 4, 2000.
4.Shekar Meenu, The Men behind Infosys, Businessworld, November 7, 1998.
5.Prayag Anjali, The making of a leader, The Hindu Business Line, August 19, 2000.
6.Bodow Steeve, Murthy's Law, www.financeasia.com, November 2000.
7.Infosys, a bit of paradise in Bangalore, Business Week, January 2001.
8.Phadnis Aditi, what money can't buy, Business Standard - Strategist, December 2000.
9.Prayag Anjali, Back to basics at Infosys, Business Line, May 22, 2001.
10. Infosys top brass to go back to school, The Hindu, August 2, 2001.
11. www.infy.com.
12. www.indiainfoline.com.
[1] The Cadbury Committee was set up in May 1991 in the United Kingdom. The
stated objective of the committee was "to help raise the standards of corporate
governance and the level of confidence in financial reporting and auditing by
setting out clearly what it sees as the respective responsibilities of those
involved and what it believes is expected of them." The committee had made 19
recommendations.
[2]Business Today, November 7, 1999.
[3]Business World, September 24, 2001.
[4]www.infy.com, Press, March 22, 2001.
[5]A&M, June 30, 1999.
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