History teaches us that the great industrial revolutions which transformed the West were usually led by one sector. In the case of Britain, it was the export of mill-made textiles; the railways changed America and Germany; it was timber exports in the case of Sweden and dairy exports in Denmark’s case. In the same way, information technology may well be India’s ‘lead sector’. If you were an Englishman living in London in the 1820s, you would not have seen an industrial revolution in the making—you would have seen lots of textile exports. Similarly in the India of 2009, you do not see a revolutionary transformation—you see lots of software exports.
Since the rise of Infosys is almost synonymous with India’s rise, I looked for the answer to one nagging question in Narayana Murthy’s book, A Better India, A Better World. How did Indian companies manage to become globally competitive so quickly after the reforms? Although this book of lectures and speeches by the revered founder of Infosys did not set out to answer this question, I found plenty of hints in it.
Murthy believes (and I agree with him) that there is no such thing as an Indian art of management. The rules for running a good company are the same around the world—passionately care for your customers; be fair to your suppliers; and respect your employees. Successful companies employ these rules in order to create competitive advantage through better service to customers, or lower costs and prices, or by inventing better products. Gradually, these rules and advantages get embedded in the company’s information system. The success of Infosys and our best IT companies lies in having created software unique to each company’s information system and delivering it globally.
The key to business success, however, lies not in the strategy but in the execution. The proudest achievement of our software industry is consistently good execution. We have always known that Indians were good at thinking and strategy, but there has always been a gap between thought and action. Companies like Infosys have succeeded in creating conditions for bridging this gap, and this has given the nation confidence.
How did they do it? In the case of Infosys, it is a result of shared values. Murthy says, "Our core assets walk out every evening, mentally and physically tired. It is our duty to ensure that these assets return well rested, energetic and enthusiastic the next morning." From this realisation was born a system of values grounded in the deepest respect for its employees, who in turn demanded an environment of openness, trust, merit- based rewards, and good governance. It is this value system which helped Infosys not to succumb to General Electric’s unreasonable demands in 1995 and it walked away from a customer who accounted for 25 per cent of its revenue. It also helped its leaders to admit to their investors in public that they had erred by parking their reserves in the secondary market and had lost a lot of money.
In the end, it is the ability to think big that has created companies like Infosys. It seems to me almost criminal to think small in India. Yet this is precisely what our netas and babus do all year round. If you create enough companies like Infosys (which now employs more than 1,00,000 people), you should be able to transform the country. There are now probably two dozen globally competitive companies in India. Despite that, the gap between the rich and the poor is not going to close easily and Murthy is aware of it. You cannot expect to jump from an agricultural to a services economy and skip a vibrant manufacturing stage, which is the only way to take starving peasants from the farms to the cities. I personally believe that our sez policy, flawed as it is, may be the answer, and states like Gujarat and Tamil Nadu have realised it.
Nations become prosperous not by giving people fish but by teaching them to fish. Murthy emphasises rightly the need for education in bridging the gap between the rich and the poor. Our failure in education is not so much the lack of investment, but of execution, delivery and solving problems like absentee teachers and rote learning. None of this, alas, figures in the manifestos of our political parties during this election. Despite that, we have created the Murthys and Infosyses and become in the process the second fastest growing economy. That is the miracle!
